Billions of pounds of interest are being lost by savers who don’t switch their low interest rate accounts to higher rate facilities.
Low interest savings accounts prevent savers from making the most of their money. Savers are losing out on £12 billion a year by keeping their money in savings accounts with low interest rates, according to Which? research.
The consumer association found that almost half of the 12,000 accounts available on the UK market pay 0.5% interest or less – a quarter of accounts pay out a miserly 0.1%, which translates to an annual interest of just £1 for every £1000 saved.
Ulster Bank’s Easy Access Savings Account and Newcastle Building Society’s Nova Plus Issue 3 Account were found to pay 0.01% meaning that a saving of £1000 would provide customers with a saving of just 10 pence.
Chief executive of Which? Peter Vicary-Smith said: “Banks are depriving British savers of £12bn a year by keeping us in the dark about the pitiful interest paid on hundreds of savings accounts”.
He continued: “Whilst we pressure the banks to be more upfront about their rates, people can take action and potentially add hundreds of pounds a year to their savings by moving their money to a better account”.
Which? is trying to get banks to change the way they inform customers of their interest rates by pressing them to publish interest rates on all statements and providing customers with an annual notice outlining the rates transparently.
The British Banker’s Association said: “Banks provide a variety of savings products to suit people’s needs and have no interest in keeping customers in the dark about the products they use. Information is readily available in branches, online and from a variety of other sources, including newspaper best buy tables and comparison websites and customers will also be automatically notified if there are changes resulting in materially lower rates so they can switch their funds”.