Apathetic savers in the UK losing out by not checking interest rates and switching to a better deal, survey shows

News - Savings

Written by Ray Clancy

Monday, 02 August 2010 08:19

British savers are missing out on £9.4 billion by not checking their rates with one in three admitting that they have never the interest paid on their savings account, research shows.

Some 57% have never switched savings accounts and this kind of apathy is costing savers and extra £245 of interest per year, according to a study by moneysupermarket.com.

This means that UK savers could be missing out on a massive £9.4 billion a year by failing to check the interest rate paid on their savings account and switching to a better deal.

The comparison site is urging all savers to check their rates regularly and take action to ensure their money is working as hard as possible for them.

The apathy has been increasing despite the gloomy economic outlook which some might have though would prompt savers and investors to make sure their money is working as much as it can for them.

But 36% of all savers have never checked their savings rate, up from 31% last year, and despite holding their accounts for an average of seven years, the survey found.

Savers who have not checked their rate will most likely have money languishing in discontinued accounts that are no longer available to new customers. The average rate for discontinued accounts among the main high street savings providers is 0.3% AER. Of those who have checked the interest rate since taking out their account, 41% have been disappointed to find that their rate had gone down, it also found.

‘We have seen a year on year increase of people not checking their savings rate, with over a third failing to ever check their current deal. Our findings also show a third of savers, 30%, opened their account over ten years ago, but when it comes to savings, loyalty does not pay, and these customers are most likely getting a raw deal on their savings,’ said Kevin Mountford, head of banking at moneysupermarket.com.

He pointed out that generally speaking, if you opened a savings account over 12 months ago, you will probably find the account will now be paying a much lower rate that you signed up for.

‘Clearly many savers are reluctant to shop around for the best rate as 26% don’t feel that it’s worth switching in this low rate environment and 19% cannot be bothered to switch their account,’ he explained.

‘However, getting a good deal on your savings doesn’t have to be a headache and not every saver will want to continually chase the highest interest rate available. For those that want to switch to a good deal and remain on it without running the risk of bonuses or withdrawal penalties, there are a number of accounts on the market that have performed well since Base Rate dropped to 0.5%, making it easier for customers to keep an eye on their rate,’ he said.

‘Our research highlights precisely why it is so important that savers be proactive in checking their rates, as they are likely to be missing out on a large amount of interest. Remaining apathetic at this time plays into the hand of the banks and will cost consumers dearly in the long run,’ he added.

He also said that banks are reluctant to inform customers of rate changes, so the onus is on the customer to ensure they are getting the best deal. ‘We encourage all savers to get online or call their bank to find out what rate they are currently on, then search for the best rate available and switch as soon as possible to avoid any further loss of income,’ said Mountford.