Could you quadruple your savings returns?
Don’t underestimate the financial impact that leaving your money languishing in an account paying low interest can have.
More than £250 billion is currently sitting in instant access accounts earning 1% or less, despite the fact several easy access accounts now pay more than 4%.
According to analysis by Paragon Bank, by volume, 38.6 million, or 59%, of instant access accounts pay savers interest of 1% or less. Over a quarter (27%) of all cash held in accounts is earning 1% or less and has a balance of greater than £10,000.
Derek Sprawling, Paragon Bank Director of Savings, said: “Given rates have been increasing across fixed and instant access accounts for over a year now, it’s still surprising that over three in every £10 in an instant access account earns 1% or less. What’s even more surprising is those individuals with significant balances of £10,000 or more in their account earning poor rates of return.”
Don’t underestimate the financial impact that leaving your money languishing in an account paying low interest can have. For example, someone with £30,000 in savings could miss out on an extra £900 in interest a year if they leave their money in an account paying 1% compared to one paying 4%.
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It’s therefore well worth keeping a close eye on the returns you’re earning, and moving your money if you can find better rates elsewhere.
Current best buy easy access accounts at the time of writing include Shawbrook Bank’s Easy Access Issue 36 account, paying 4.52% on a minimum opening balance of £1,000, Chip’s Instant Access account paying 4.51% on a minimum deposit of £1, and Coventry Building Society’s Four Access Saver Online 2 account which can be opened with a minimum deposit of £1 and offers a rate of 4.5%, and
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When choosing an account, bear in mind that even though they might be marketed as easy access, many accounts still impose withdrawal restrictions. For example, you can only make withdrawals from the Coventry account up to four times a year. If you want to make any more withdrawals than this, you’ll lose 50 days’ interest on your savings.
Once you’ve decided which account you want to move to, you’ll need to let your current provider know that you want to close your account down. They may agree to let you make a BACS transfer into your new account, or they may transfer your balance across into your current account and you can then move it across to your new account from there.
Anna Bowes, founder of savings website Savingschampion.co.uk, said: “With the possibility of the interest rate cycle nearing its peak, those who’ve not recently reviewed what they are earning on their cash, could help add pounds to their pockets. And if you don’t need access to all your cash, perhaps tying some up for a bit longer to hedge against rate decreases in the coming years could be something to consider.