Average instant access savings rate at three-year high

Recently conducted research has found that the interest rate on the average instant access savings account has reached its highest level in more than three years – provided that savers are willing to switch accounts regularly to secure the best rates.

Savers have been at the mercy of the Bank of England over the past 38 months, as the Bank’s Monetary Policy Committee has left the base rate unchanged at 0.5 per cent.  Many savings products have languished over this time, offering ultra-low interest rates to savers in the meantime, yet banks and building societies have found themselves in a price war to remain competitive when it comes to instant access savings products in an effort to drive retail funds.

However, existing savers are quite often left out in the cold by these banking providers, who reserve the best rates exclusively for new customers.  Most existing accounts offer quite abysmal rates, and research shows that around one out of very 4 easy access accounts earn no more than 0.10 per cent interest on a balance of £1,000, meaning that all too many savers could be missing out on real returns by not switching to a new provider with a headline rate.

The differences are quite apparent after taking into account the kinds of returns a saver would have made if they had found the best rate in May of 2009, deposited £1,000 in the account, and then switched providers once a year until today to keep up with the best rates – customers in this situation would have earned around £72 in interest in such a situation.  However, for customers that took out the account in 2009 and then did not switch as interest rates changed, they would have only earned around £30 in interest over the same period of time.

© 2021 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.

Tags: , ,