MILLIONS of Brits could be missing out on £619 every year because of the way they use their current accounts.
Over 12million customers are missing out on just under £8billion worth of savings interest, according to Atom Bank.
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Savers who keep their cash sitting in their current account are earning hundreds of pounds less in interest than those who at least move it into the top paying easy-access saver.
Current market leaders have a savings rate of 4.21% available, which, considering most current accounts have a rate of 1% or less, represents a huge jump.
The average current account paid savers just 0.65% back on their deposits in April, according to Bank of England figures.
But Chip’s instant access saver pays savers a whopping 4.21% back and customers are free to make as many withdrawals as they wish without fee.
The average bank customer holds £17,365 worth of savings, according to Money.co.uk.
With this in mind, if they were to keep this in a current account paying the average rate of 0.65% they’d earn just £112 at the end of the year.
But if the same amount of savings were shifted to Chip’s saver, they’d earn a whopping £731 – £619 more than if they were to leave it in their current account.
Mark Mullen, chief executive at Atom Bank, said: “Moving money to a decent savings provider can mean hundreds of extra pounds a year in your pocket.
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“We’ve seen a rise in the use of the Current Account Switch Service as customers take advantage of one-off payments to move, so there’s no reason why savers shouldn’t be proactively making the switch too.
“Easy access saver accounts can be opened in minutes, and providers should allow unlimited withdrawals, so it really is that simple.”
Where should I be putting my savings?
Last month, the Bank of England increased base increased its base rate by 0.5 percentage – the sharpest increase since February.
It means a rise from 4.5% in May to 5% in June, the highest in just under 15 years since September 2008.
It is also the 13th time in a row that the BoE has raised rates since December 2021 when they were at historic lows.
The increase is bad news for borrowers as it makes the cost of mortgages and other loans more expensive.
But it’s good news for savers who can get access to better returns and you should check your existing account to make sure it’s worthwhile.
Chips easy access account which pays savers 4.21% and allows for unlimited withdrawals.
This means that those saving £1,000 in the account would earn £42.10 in interest after 12 months.
But savers could also get a higher rate by locking their cash away in Al Rayan Bank and Raisin’s 1 Year Fixed Term Deposit which pays savers 6.01% back.
The only downside to fixed bond accounts is that you’re forced to lock away your cash for a defined period of time.
So it’s always worth weighing up to see what’s best for you.
How can I find the best savings rates?
With your current rates in mind, don’t waste time looking at individual banking sites to compare rates – it’ll take you an eternity.
Visit comparison websites such as MoneyFactsCompare, Go Compare and MoneySupermarket.
These will help save you time and show you the best rates available.
These sites let you tailor your searches to an account type that suits you.
There are five main types of savings accounts, and understanding the differences can help you narrow down the options.
- Easy-access savings accounts – usually allow unlimited cash withdrawals. However, this perk means they tend to come with lower interest returns.
- Regular savings accounts – generate decent returns but only on the basis that you pay in a set amount each month.
- Notice accounts – offer slightly higher rates than easy-access accounts but you’ll need to give advance notice to your bank (up to 95 days) before you can make a withdrawal or you’ll forfeit the interest.
- Fixed-rate bonds – these offer some of the highest interest rates. However, if interest rates increase during your term you can’t move your money and switch to a better account.
- Individual savings accounts (ISAs) – these can pay high interest but come with high withdrawal fees. But, Lifetime Isas are great for anyone aged 18-39 hoping to buy a house or save for retirement.
