Savings interest rates have been on the rise over the past year, yet UK savers are not making the most of favourable rates on offer. New research from investment platform Charles Stanley Direct has found that savers could be missing out on thousands of pounds by leaving their savings in low interest accounts.
The research found the average rate savers are currently receiving on their savings is 3%, with 44% stating they receive 3% or less on their savings. A further one in four (26%) savers said they are earning 2% or less on their savings. Even more concerningly, 14% revealed they have no idea what interest rate they’re currently getting on their savings, meaning they could be missing out on a considerable boost to their hard-earned cash.
Charles Stanley Direct has calculated what savers could be missing out on in terms of interest by looking at the difference between the average interest rate (3%) consumers said they are receiving on their savings, compared to the current top savings rate available on Charles Stanley Direct’s Cash Savings platform (4.5%). This could be as much as £1,900 over 5 years at 4.5%, on an average savings value of £21,840*.
| £ 21,840* | Average savings rate 3% AER | Upper rate of easy access 4.5% AER | Difference |
| One year | £22,495.20 | £22,822.80 | £327.60 |
| Two years | £23,170.06 | £23,849.83 | £679.77 |
| Three years | £23,865.16 | £24,923.07 | £1,057.91 |
| Four years | £24,581.11 | £26,044.61 | £1,463.49 |
| Five years | £25,318.55 | £27,216.61 | £1,898.07 |
There is a clear savings apathy among Brits, with two in five (40%) admitting they’ve never switched savings account, despite there being higher rates on offer. There are people who do proactively switch, though 18% said they only switch their savings accounts or providers once a year or even less frequently than that. This means they risk losing out on higher interest rates on the market.
Interestingly, what the research did highlight was that even though many are not taking advantage of market-leading savings rates, almost a third (30%) say they’re happy with the rate they’re currently receiving. Conversely, 15% said they are unhappy with their savings rate, yet many are not proactively switching their accounts to take advantage of better rates.
13% said they don’t monitor the rate they’re getting as they’re happy with the account or provider they are with, while 10% said they have no idea what rate they are getting. 13% said they can’t keep up with the constant rate changes, meaning many leave their savings idly in low interest earning accounts.
To help individuals access some of the most competitive rates on the market, Charles Stanley Direct has launched its new Cash Savings proposition. A one-stop-shop via a single online account, Cash Savings allows people to manage their cash and easily access some of the best savings rates from competitive high-street and challenger banks. Users can choose from a range of savings accounts – easy access, fixed term, and notice – with minimums starting from just £1.
Rob Morgan, Chief Analyst at Charles Stanley Direct, said: “Interest rates on savings accounts have reached as high as six percent in the past year, offering cash savers some great returns on their money. Yet many have not taken advantage of this, causing them to miss out on a considerable savings boost. Ultimately, just as many do with their energy providers, savers need to vote with their feet and seek out competitive returns. But with so much information out there and rates continuously updating, it can be hard to keep up and decide where is best to keep your savings.
“The new Cash Savings platform through Charles Stanley Direct aims to help savers capitalise on the higher interest rate environment, both quickly and with the least hassle possible. Managing everything from one place, savers can access some of the most competitive interest rates on the market, and move easily between offers and account types from different banks as rates change and needs evolve.”
