69% of people haven’t switched savings accounts while interest rates have skyrocketed

If you do one thing today - check what interest you are earning on your savings. 

Interest rates have increased dramatically in recent years, but there are still many people that haven’t switched savings accounts.

We conducted a survey* to find out people’s savings habits in the UK, and it revealed 69% of consumers haven’t switched savings accounts in the past two years. Of those people who haven’t switched, 51% said the reason for not doing so was they were satisfied with their account and 27% said they preferred to keep all their accounts with the same bank. 

However, this decision means that many people are likely earning a lot less interest than what is currently available in the market. 

To prove this point, let’s rewind to June 2022. 

During this time, the base rate stood at just 1.25% and the monthly average for all savings accounts was 2.73%. The monthly average for an instant access account was 1.37%. 

So, let’s say you have £10,000 in an instant access account and you don’t make any further deposits or withdrawals and the interest rate remains the same. After a year, you would earn £137 if the interest rate was 1.37% (before tax). 

But, now let’s fast forward to June 2024 because the interest rates tell a different story. 

At the most recent Bank of England meeting, the monetary policy committee decided to keep the base rate at 5.25% - 2.52 percentage points greater than June 2022. 

This increase is then evident in the average for all savings accounts as that currently stands at 4.1% and the monthly average for an instant access account is 3.6%. 

So, let’s take the same situation again - you have £10,000 in an instant access account (no withdrawals or deposits), but you’ve switched savings accounts to one that offers 3.6%. After a year, the interest earned would be £360.00 - £223 more than if they left their money sitting in a low interest account. 

This means it really does pay to move your money. For the 31% of people who have switched savings accounts in the past two years, 66% said the primary reason for doing so was higher interest rates. 22% said it was because there were better account features like linked accounts and easy transfers. 

When comparing savings accounts it’s important to look at all the terms and conditions before taking the plunge, as each account does come with different features. The interest rate should just be the starting point for your decision. 

Plus, the example above is only looking at the average interest rate, and the top interest rates in the market are actually a lot higher.  

For example, Oxbury has an easy access account at 5.02% and Mizrahi Tefahot Bank Ltd via Raisin has a one-year fixed-rate account at 5.25%. This matches the base rate and it can be opened with £1,000. 

So, if you check the interest rate on your bank accounts and discover that it’s more like June 2022 than June 2024 - then it’s worth doing some research to find a better deal. 

*Survey conducted by Censuswide on behalf of money.co.uk - 2,003 respondents from the UK aged 18 and over. This survey was conducted in June 2024.