Interest rates have been on the rise over the past year, with the Bank of England (BoE) hiking UK interest rates a whopping 14 times in a row. The current UK base rate sits at 5.25%
- its highest level since the financial crisis.
Yet, many of us are not making the most of the favourable interest rates on offer and taking advantage of an important savings boost.
Our research has found that savers could be missing out on thousands of pounds by leaving their savings in low interest accounts. Nearly one in two savers (44%) are, on average, receiving less than 3% interest on their cash saving. Two in five savers (40%) admit they’ve never switched savings account. Do you fall into this category?
How much money could savers be missing out on?
We’ve crunched the numbers to see 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’re receiving on their savings, compared to the current top easy access savings rate available on Charles Stanley Direct Cash Savings is 4.5%.This could be as much as £1,900 over five years on the average savings value of £21,840.
Table: Based on the average value of savings held by an individual, according to Building Societies Association (BSA). Savings have been calculated by using annual compounding and do not account for tax
There is a clear savings apathy among UK savers. But why?
In the past, getting a market leading interest rate on your savings was an almighty task. Searching lots of websites to compare rates, completing large amounts of paperwork to transfer, and trying to remember multiple login details for multiple providers made managing cash savings a painful experience.
Additionally, we’ve become accustomed to a low-interest rate environment. During the financial crisis in 2008/09, interest rates hit the floor and remained there for well over a decade. Consumers were right to ask the question – is the hassle of switching saving accounts worth a few extra pennies? Probably not.
Things have changed now, though. Interest rates are well above their long-term average, and aren’t expected to return to average levels until 2025. With that in mind, it’s important for consumers to change their habits of the past and start being more proactive with managing their cash savings.
UK interest rates since Sept 2006
Source: Bank of England
The BoE decided to pause raising interest rates in the last two meetings as inflation dropped to its lowest level in two years. A likely signal that interest rates have hit their peak. Could now be a good time to lock in an inflation-beating rate?
Ultimately, just as lots of us do with our 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. This is where cash savings platform, like Charles Stanley Direct’s Cash Savings, can help to make managing your cash simple.
Achieve a better savings rate through Charles Stanley Direct
Charles Stanley Direct Cash Savings partners with Bondsmith, a financial technology company authorised by the Financial Conduct Authority, to make managing your savings quicker and easier than ever before.
You can manage your savings via online log-in and easily access competitive savings rates from competitive high-street and challenger banks. With Charles Stanley Direct Cash Savings, you can choose from a range of savings accounts – easy access, fixed term, and notice – with minimums starting from just £1.
Find out more by watching a short, three-minute video on cash savings.
Past performance is not a guarantee of future returns. The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment. Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
The information in this article is based on our understanding of UK Legislation, Taxation and HMRC guidance, all of which are subject to change. The tax treatment of pensions depends on individual circumstances and is subject to change in future. This article is solely for information purposes and does not constitute advice or a personal recommendation.
Your home is at risk if you do not keep up the repayments on your mortgage.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
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