For some savers, the future is not looking bright.
Cash held in a high street bank instant access account will already be earning terrible rates. And with more interest rate cuts expected in 2025, those savings rates will follow the trend and be dragged even lower.
Yet even with that outlook, savers are still slow to switch.
In our recent survey, only one in five said they’d switch if their bank cut the rate on their easy access account. Another two fifths didn’t have any plans to switch at any point in the future.
Shockingly, it’s even worse with older people who rely more on large cash balances. Among those aged 55 and older, 37% haven’t switched for at least five years. That’s despite some breathtaking deals in the last few years for people who shopped around.
So, here are the real costs of sticking to the same old savings accounts.
This article is not personal advice. If you’re not sure an action is right for you, ask for advice.
Doing nothing could cost you hundreds
A lot of savers underestimate how costly it is to leave money in low-paying accounts.
At the time of writing, the average high street easy access account right now pays just 1.77%, whereas competitive rates are offering above 4.60%.
On a balance of £20,000 for a year, not switching to a better account means you could miss out on £566 (assuming the rate will stay the same for the entire year).
For people with more cash, like higher earners or retirees, the cost adds up even faster.
According to the HL Savings & Resilience Barometer, the wealthiest 20% of households in the UK hold an average of £32,263 in cash savings. By sticking with the same low-paying account, they could be losing as much as £913 a year.
Be smart about switching
Before jumping into the best rate you see, think about what you’re saving for, then break your savings down by timeframe.
For emergencies, we recommend enough to cover 3–6 months of essential expenses if you’re still working, 1–3 years if you’re retired.
Then, for money you’ll want to use in a few years’ time, consider locking up portions of cash in fixed-rate accounts. You’ll usually get a higher rate, and because the rate is fixed, you’ll know exactly how much interest you’ll get at the end.
Plus, with savings rates expected to fall next year, fixing now will secure you that higher rate. So, you can switch to a fixed rate and safely watch the interest in your old easy access account tumble.
It doesn’t have to be hard work
This all sounds like hard work, but it doesn’t have to be.
With savings platforms like Active Savings, you can find consistently competitive easy access and fixed rates from different banks.
That means instead of chasing rates around new banks and juggling accounts, you can manage everything all in one place online.
When you want something new, just pick a rate and switch available savings almost instantly.
Open an account in minutes, and you might never have to switch again.
The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.
Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).