The loyalty of savers to their bank costs them large sums of money in lost interest on savings

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Our loyalty to our bank and to the savings accounts with miserable interest costs us huge sums of lost interest. During the pandemic, billions were poured into instant access accounts, a lot of which the big banks are sucking up. But these high street stars only pay 0.01% (VRE / gross). With a savings pot of € 10,000, that’s only € 1 in interest after a whole year.

Do you think prices are too low to bother switching?

It’s easy to see why people think it’s not worth switching while prices are so low. But prices have risen in the last few months. So if you’re making next to nothing on a 0.01% (* AER / gross) savings account, you could be making 50x the interest by switching to the most competitive Easy Access plan on the market. If you had £ 10,000 and you could tie up your money for a year, you could get 140 times the return.

We have also seen interest rates rise lately in active saving. Some are now the highest in a year.

In recent years we have mostly deposited funds into instant access instead of fixed rate accounts. This is the right place for your emergency savings of 3-6 months on critical expenses when you are at work (one to three years when not at work) and all the money you know will need in the future. But it could be a missed opportunity for the rest of your savings.

Fixed terms usually pay the best rates, but you usually can’t access your funds until they expire.

The gap between the interest available on easy-access accounts and fixed-rate accounts is starting to re-open. The most competitive one-year plan now pays more than double the best instant access plan.

How much does loyalty to your bank cost you?

The second most common reason money languishes in accounts with measly returns is because we trust our bank. We know the high street regulars well, so it’s easier to leave our money with them rather than using a lesser-known online bank.

However, these newer banks must follow the same rules as these high street stalwarts to operate in the UK. They also come with the same protections. Should a bank fail, the first £ 85,000 will be guaranteed by the Financial Services Compensation Scheme (FSCS).

These smaller and newer banks usually offer the best interest rates. So we have to consider how much interest we will lose if we don’t trust a bank just because it doesn’t feel that familiar.

Is this change too cumbersome?

We’re all busy and at times it can feel like a hype to have to keep moving money for a better rate.

Less than a third of people have switched accounts in the past 12 months (31%) **, while half have not switched accounts or have not switched at all in five years or more (50%).

Overwhelmingly, we don’t switch because we think it’s not worth it when prices are low. Ironically, one switch can make the biggest percentage difference since the interest rates available from major high street banks are now so low.

** Source: HL survey conducted by Opinium, September 2021, 2,039 responses.

Save yourself the hassle with Active Savings

One way to avoid the annoying switch is to use an online cash saving platform like Active Savings. Instead of going directly to many banks and building societies, you can open an account with one application and switch your money between different products at different banks and building societies with just a few clicks.

You can see all of your products in one place, which makes it a lot easier to manage. And you don’t have to memorize different security information.

Choose from easily accessible, restricted and limited-term products ranging from a few months to five years. Get started in minutes.

High street banks offer instant access products that provide instant access to your money. Active Savings offers easily accessible products and withdrawals typically take one business day.

This article is not intended to be personal advice. Please remember that inflation reduces the future purchasing power of cash.

The best prices for active saving

Easy access

Up to
0.50% | 0.50%

(AER | Rough)

1 year

Up to
1.35% | 1.35%

(AER | Rough)

2 years

Up to
1.55% | 1.55%

(AER | Rough)

3 years

Up to
1.65% | 1.65%

(AER | Rough)

Easy access

Up to
0.50% | 0.50%

(AER | Rough)

1 year

Up to
1.35% | 1.35%

(AER | Rough)

3 years

Up to
1.65% | 1.65%

(AER | Rough)

Find out more

Please note that the above products are some of our most popular, but there are more. Click on the link above to see our full range. Products can be added or withdrawn at any time. Minimum deposit requirements apply to individual products. Easy-access products pay a variable rate and limited-term products pay a fixed rate.

* AER (Annual Equivalent Rate) – AER indicates what the interest rate / expected profit would be if it were paid and compounded once a year. It helps you to compare the tariffs of different savings products.

Gross – the interest rate without deduction of taxes. Interest / profits are paid gross. You are responsible for paying HM Revenue & Customs any taxes due on interest / profits in excess of your personal savings amount. Tax treatment is subject to change.

Expected Rate of Return (EPR): Islamic banks offer an expected rate of return on their savings products instead of interest in order to comply with Sharia banking principles.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorized by the Financial Conduct Authority under the Electronic Money Regulations 2011 with fixed reference 901007 for the issuance of electronic money.

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