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Savers with big name banks such as Barclays and Lloyds Bank have been urged to check if they can get a better interest rate elsewhere.
Experts are urging account holders to compare rates as a quick change could boost your savings growth by hundreds of pounds a year.
Matthew Parden, CEO and co-founder of savings provider Marygold & Co., warned loyal savers with the big banks not to be complacent.
He said: “Many high street banks are known for offering relatively low interest rates on their savings accounts, which can make it very difficult to build up savings in the current environment of higher inflation.
“For instance, easy-access savings accounts can offer rates as low as 1%, leaving savers with very little return on their deposits. This can result in the real value of savings diminishing over time as inflation outpaces the growth of funds in these accounts.”
Inflation was at 3.9% for the year to January yet many of the best-known banks offer rates for instant access savings of well under half this rate, meaning your cash held in these accounts is declining in real-terms value.
For example, Lloyds Bank offers just 1.1% for the basic rate on its Easy Saver and Instant Cash ISA while Barclays pays 1.26% with its Everyday Saver.
Mr Parden explained the major savings boost you could get by switching: “If someone had £10,000 saved with a bank offering a rate of just 1%, they’d earn only £100 in interest over a year. However, if they switched to a more competitive savings account offering 3%, then they could earn £300 in interest instead.
“That’s a difference of £200 simply by taking five minutes to apply for a new account, which could go towards other financial goals or help cushion the impact of rising living costs.”
You could get more than this by switching as several providers are offering rates on easy access accounts of 4.5% or above, increasing your savings earnings by £350 a year if you had £10,000 deposited.
Another savings expert has also urged people with the big banks to shop around. Amy Knight, personal finance expert at NerdWallet UK, gave a rundown of some of the low rates that can be beaten elsewhere.
She said: “Nationwide currently offers just 1.8% interest with its Instant Access account on balances under £10,000. Even if you had £50,000 you’d only earn 2% in this account – noticeably less than inflation.
“The standard rate paid out on HSBC’s Online Bonus Saver Account is just 1.5%. However, by avoiding making withdrawals for a year the rate gets bumped up to 4%.
“This illustrates how crucial it is for savers to think carefully about when they’ll need to take the money out when choosing an account.
“For savers who want to start a habit of putting up to £150 into savings each month, NatWest’s Digital Regular Saver currently offers up to 6.17% on balances up to £5,000.”
Ms Knight cautioned against just sticking with your current provider, saying that if you’ve been disappointed with their service lately it could be time to move around your cash.
She said: “If you’ve been inconvenienced by IT disruptions, disappointed by measly interest rates, or if you’re keen to explore tools and features from other digital providers, it could be time to break up with your bank.
“Big-name banks rely on the fact that due to their size, tenure and established brand identity, they have accrued a lot of loyal customers.
“They can afford to be less generous with interest rates on savings because they know people get stuck in their ways and many won’t take the initiative to find a better deal elsewhere. Don’t be one of them.”
