Figures from Hargreaves Lansdown, the DIY investment group, show that more than half of us don’t plan to switch our accounts for a better deal, with many feeling it is “too much hassle” or that they “can’t be bothered”.
The figures match concerns from John Wood, editor of the Moneyfacts Interest magazine, who believes 15 years of low rates have made us apathetic about the benefits of getting the best rates.
He said: “The current generation of potential savers haven’t yet fully realised how good a return they can now get on their savings.
“We can now get an easy-access variable rate of 4.67%. You were hard pushed to get anything like that even before 2008. Why aren’t they flying off the shelves?”
Wood said without a sustained education campaign on the importance of interest rates and getting the best deal, most will not realise that better rates can make a difference.
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‘Faulty assumptions’
Meanwhile Sarah Coles, head of personal finance at Hargreaves Lansdown, said our savings habits are dictated by faulty assumptions.
“Not everyone makes their savings the centre of their universe. Some people are too busy getting on with everything else to get excited about rates, or regular switches. Unfortunately, this means our savings habits are dictated by unthinking assumptions, which leads us into expensive mistakes. So it’s worth understanding the five faulty assumptions leading us astray,” she said.
These assumptions are as follows:
- It’s better the devil you know
A quarter of people stick with their savings provider because they trust it.
“It’s perfectly understandable, because something that’s less familiar takes a while to get to grips with,” Coles said.
However, she said there are “plenty of reasons” to trust new banking providers that have the same guarantees and regulatory hoops to jump through as older providers.
- Moving would be a hassle
Some 12% of savers say moving would be too much hassle – rising to 23% of women and 27% of those aged 18-34. But switching savings accounts can be easier than we imagine, Coles said, especially thanks to comparison sites and the internet.
- Switching isn’t worth it
More than one in five (21%) say rates are so low it’s not worth switching. But right now, the best easy-access rates are now offering almost four times as much interest as the average high street branch-based account, meaning differences of hundreds of pounds for savers with larger balances.
- Thinking you already have the best deal
You may have secured a good deal on savings, but many come with a short-term bonus that expires after a year and leaves you languishing on a poor rate.
“Looking further afield to online banks and savings platforms will reveal just how much better they could do elsewhere,” Coles added.
- Better rates are around the corner
10% of respondents to the Hargreaves Lansdown survey said they were waiting for rates to go even higher. But this is unlikely at this stage, with most economists expecting a fall in rates.
Instead, it may be wise to lock in fixed rates for the long term at current elevated levels if you know you will not need the money for a while.
