If you are still using the same savings account you opened as a teenager, you could be losing hundreds of pounds. Financial experts are urging Britons to take a few minutes to review their savings pots, warning that inertia is costing people significant returns.
The High Cost of Savings Inertia
According to a survey by financial data platform Moneyfacts, almost a quarter of savers have never switched their savings account. A further 23% switch less than every couple of years. This is despite the average UK consumer saving around 11% of their earnings.
Rachel Springall, a personal finance expert with over two decades of experience, told Metro that trust plays a major role. ‘Many do not want to risk their hard-earned cash and feel more comfortable staying with their existing bank,’ she explained. She also noted that years of low interest may have made some feel switching is pointless, but that is no longer the case.
James Blower, founder of Savings Guru, attributes the reluctance to a mix of fear and misconception. ‘I think it’s probably a little bit of fear. It’s fear that it’s going to take a lot longer — that it’s going to be a hassle,’ he said. In reality, he points out, the process is now incredibly straightforward thanks to digital banking.
Substantial Benefits of Making the Switch
The financial incentive to move your money is clear. James Blower highlighted the stark difference in rates. While big high street banks might pay just 1% to 2% on an easy access account, the best rates on the market can reach up to 4.5%.
‘Now that’s quite a lot of difference, even on £1,000 – that could be £35 or £40 difference. So, if you start to multiply that, there can be quite a significant jump,’ he stated. He recommends reviewing your rate every six months as a minimum, and especially around a month after any Bank of England base rate change.
Rachel Springall emphasised that newer challenger banks and building societies often offer the best returns. ‘Switching doesn’t take much effort, and it’s important to get into the habit of earning a rate that can outpace the eroding effect of inflation,’ she advised.
Choosing the Right Account for Your Goals
For those ready to act, the experts outlined the best options. For an emergency fund, Rachel recommends an easy access account for complete flexibility, or an easy access Cash ISA for those with unused annual allowance.
First-time buyers should consider a Lifetime ISA, where the government adds a 25% bonus to the deposit, though terms and conditions must be checked carefully.
James Blower also pointed out that some banks, like Chase, allow you to ‘try before you buy’ by opening an account and moving a small amount to test the service without a full switch.
The need for action is underscored by recent data showing one in six (16%) UK adults have no savings at all. While experts suggest a target of £37,430 by age 30, the average for 25-34 year-olds is just £9,357.
James warned of the dangers of having no safety net: ‘If you don’t have an emergency stash, you might end up... getting a short term loan at 39.9%... and then something that should have cost a few hundred pounds, ends up costing £1,500.’
Whether you're starting from scratch or moving an old pot, the message is clear: reviewing and switching your savings account is one of the simplest and most effective financial decisions you can make today.
