Savers with their money in old savings accounts are getting far lower returns than those that actively switch to new products, with the gap between the rates paid by closed and new accounts having widened in the past two years.
According to analysis by Moneyfacts, the average closed easy access savings account – where cash is not locked away and can be withdrawn with little notice – pays a rate of just 2.82 per cent. The best easy access account on the market currently pays 5.2 per cent.
Someone with £10,000 in a savings account in an average closed account would make an extra £238 per year by switching to the best account on the market, which is currently available from Ulster Bank. They would make £520 in interest a year, as opposed to £282 per year.
Generally, savers get better deals if they monitor rates on offer and regularly consider switching to new accounts. If they leave money in accounts after they are “closed” by their bank, the interest rates can often drop.
But Moneyfacts analysis shows this is even more important than previously.
Two years ago, the difference between the average closed easy access account rate and average open account was just 0.08 percentage points – 0.51 per cent compared to 0.58 per cent.
But this gap has now widened to 0.31 per cent – 2.82 per cent compared to 3.13 per cent – meaning there is more to lose by not actively searching for better accounts.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Savers are being short-changed if they don’t proactively review and switch from their closed easy access accounts.
“Over the past two years, the average rate on a live easy access account has surpassed the average closed rate, despite base rate rises from the Bank of England and numerous calls for the biggest banks to improve savings rates for existing customers.
“Savers must shake any apathy they have to move their pots, otherwise they will be left disappointed when their loyalty is not rewarded.”
The analysis also shows how big name banks often offer accounts with far lower rates than smaller name banks.
Lloyds Bank offers a savings account paying just 1.4 per cent interest while Barclays has one paying just 1.65 per cent.
“Building societies and challenger banks continue to work hard to entice new deposits and reward loyal customers so they are worth comparing against the more familiar high street brands,” said Ms Springall.
Below is a table of the best savings rates on offer, including for those who want instant access to their cash, and those that are happy to lock their money away for a set period of time.