Savings rates from high street banks are miserable right now.
In fact, Bank of England figures show that 13% of our savings are in accounts paying no interest at all.
It’s easy to see why. We asked people whether they shopped around when they opened a new savings account – more than a third said they just went to their usual bank*.
When asked why they didn’t shop around, the most common answers had nothing to do with good deals or even great rates. They were about trust and ease.
It means the high street banks know they don’t have to offer great rates to get savers through the doors.
They can exploit the perception of hassle that keeps millions as a captive audience for whatever their usual bank feels like offering. And savers are missing out significantly as a result.
This article is not personal advice. If you’re not sure an action is right for you, ask for advice.
Savings versus inflation
The average high street branch-based easy-access current account offers just 1.8% interest. Whereas competitive rates offer 4.50% and above.
If you held £10,000 in those savings for a year, that would be a difference of £270. Over a few years, the difference could rise to be in the thousands.
That’s even more shocking when we consider the effect of inflation.
Inflation reduces the future spending power of your money. So, if your savings rate is lower than inflation, your money will lose value.
With UK inflation currently at 2.30%, it means saving at a high street bank will lose you money in real terms.
These figures assume that the rate will stay the same, whereas easy access, instant access, and inflation rates are variable. Withdrawals from easy-access accounts usually take up to one working day.
Saving habits are changing
When we asked savers about shopping around in 2022, around half of respondents said they didn’t bother because they just went to their usual bank.*
This has dropped to around a third in 2024. It’s partly because savers are getting more familiar with online banks and savings platforms.
The amount saved through HL’s Active Savings platform, for example, has doubled in less than two years to over £10bn.
As savers start looking around for better rates, they’re likely realising that keeping on top of savings is time consuming. An online savings platform, like Active Savings, brings rates from different banks through one account.
So, you can switch banks to find better rates, without wasting time opening new accounts.
Want your cash to work harder? Take a look at Active Savings. Cashback also available. Terms apply.
*Figures are from a survey of 2,000 people by Opinium for Hargreaves Lansdown in April 2024. Figures from 2022 are from a survey of 2,000 people by Opinium for Hargreaves Lansdown in September 2022.
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This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 915119). 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).