It’s unlikely switching savings accounts will top your list of New Year’s resolutions, but doing so could result in far better interest.
A large number of savers have left money languishing in accounts with some of Britain’s biggest banks and building societies which pay pitiful rates of interest.
Some of these accounts are closed, meaning they are no longer available to new applicants, but savers frequently leave dormant cash piles collecting cobwebs in these accounts as banks cut the rates paid on them to ribbons.
But despite this, the vast majority don’t switch as they believe it will be too much hassle.
Bad rates: Many savers have money in savings accounts paying interest of just 0.1%
Some of these accounts are still open to new applicants – these are likely to be used by those who want to keep cash in one place with the same bank as their current account and aren’t especially bothered by the interest rate.
However, accounts from the UK’s biggest banks pay rates as low as 0.1 per cent, according to figures from Savings Champion.
While we didn’t have room for all of them, there are a multitude of accounts paying a little as £1 on every £1,000 of savings, and many of the UK high street names have more than one account doing just that.
One is offered from Halifax and is ironically called liquid gold. You could stash £10,000 away in it and receive £10 in interest in return.
Other inappropriately titled accounts from the Lloyds-owned bank include 60 day gold, bonus gold, extra income saver and saver reward.
These four accounts plus liquid gold are all closed to new applicants, but it is likely many still have plenty of money saved in them.
| Account | Interest on £1,000 | Interest on £10,000 | Gross interest rate |
|---|---|---|---|
| Halifax Liquid Gold | £1 | £10 | 0.10% |
| HSBC Flexible Saver | £1 | £10 | 0.10% |
| Lloyds Bank Club Lloyds Saver | £1 | £10 | 0.10% |
| Post Office Instant Saver – Issues 1-10 | £1 | £10 | 0.10% |
| Nottingham Building Society eSaver Plus Issues 1-3, 5-7 | £1 | £10 | 0.10% |
| Source: Savings Champion | |||
The Post Office has 18 closed accounts paying just 0.1 per cent, including 10 issues of its instant saver.
Savers who hold money in any of these accounts have no excuse for earning such a tiny return, as the Post Office currently offers an easy-access account with one of the better rates around – money can be transferred via a simple phone call.
Meanwhile, HSBC and Lloyds Bank both offer easy-access accounts currently open to new applicants, but both pay just 0.1 per cent.
Lloyds’ Club Lloyds Saver does pay a higher 0.6 per cent on balances above £25,000, but this is still far lower than the Bank of England base rate and less than half the top easy-access account out there.
Why switch?
According to a recent survey of 2,005 people by challenger savings provider Ford Money, just 14 per cent said they were likely to switch this January.
That was lower than the percentage of people who estimated they’d try going Vegan.
A fifth of those surveyed who never or rarely changed savings providers said it would be ‘too much hassle’ or ‘take too long’.
However, 55 per cent would be willing to switch savings providers – which doesn’t take very long at all – if they were incentivised through a better savings rate.
And comparing the lowest rates around to the highest ones, if you have money languishing in one of those closed accounts paying 0.1 per cent you could receive a tidy cash boost in time for next Christmas.
The top easy-access rate on the market is currently offered by challenger savings provider Shawbrook Bank.
It pays 1.41 per cent, or £141 after a year on a £10,000 deposit.
Switching from Halifax’s liquid gold account to Shawbrook’s account would see savers earn £131 more for a few minutes work. Applicants can open the account online.
Meanwhile Yorkshire Building Society’s one year limited access saver pays 1.4 per cent, or £140 on savings of £10,000, provided savers are happy to only access their money on one day a year.
Still, with the extra interest earned, savers could lock savings away for a year and then cash in, and use the £130 extra to spend on Christmas presents or the Boxing Day sales.
Goldman Sachs’ Marcus is not quite the best buy table-topping titan it once was, as savings rates have fallen this year, but it still pays 1.35 per cent and no longer requires you to worry about renewing a bonus rate for it.
The only downsides are that all five of the top accounts, and plenty more further down the list, can only be opened online, which does disadvantage savers who don’t use the internet.
Even though inflation has remained fairly low – the Consumer Prices Index remained at 1.5 per cent in November – savings rates are still lower than that on easy-access deals, meaning savings will still be outstripped by inflation.
Savers can earn £1,000 in interest under the Personal Savings Allowance before they have to pay tax on it. Higher rate taxpayers have a smaller allowance of £500.
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