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Savers missing out on £7bn a year by not switching

Written by: Emma Lunn
More than half (48%) of savers can’t be bothered moving their money to a different savings account to get a better interest rate.

Research by Hargreaves Lansdown found that by switching from a typical high street easy access account to the best on the market, you could get 96 times the interest rate.

The investment platform found that the typical high street easy access account pays 0.01% but the best easy access account on the market pays 0.96%.

With more than £726bn sitting in high street easy access accounts, the findings suggest that Brits could be missing out on up to £7bn in interest in total.

Hargreaves Lansdown found that half (49%) of people haven’t switched savings accounts in the past five years, while 37% have never switched.

The most common reason for not switching is that rates are too low to bother with. The lower rates fall, the higher this figure climbs. At the moment 48% of those questioned thought it wasn’t worth switching, up from 43% last year.

Only a small minority say they haven’t switched because they already have the best rate.

Hargreaves Lansdown commissioned Opinium to survey 2,001 UK adults from across the UK about their savings attitudes and habits in September 2020.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, says: “Savers can’t be bothered to switch – and it’s costing us up to £7bn in interest. The lower rates drop, the more impact a switch will have, but the less likely we are to get round to it.

“It’s only natural that while rates are dropping, people get less excited about the best on the market. However, we’re so focused on the headline rate that we’re missing the fact that the gulf between high street rates and the best rates is widening dramatically. 12 months ago, you could get 6.4 times more interest by moving from the high street to the best rate: now you can get 96 times as much.

“And this is only the half of it, the longer you leave money languishing in an account, the lower the rate tends to drop. It’s one reason why we have £212bn sitting in accounts paying no interest at all.”

Hargraves Lansdown found that six in 10 (60%) people say they aren’t planning to switch their savings at all. However, one in three (33%) are planning to switch in the next 12 months.

Men are much more prepared to switch their savings, with 44% of men saying they will switch in the future compared with 35% of women.

Hargreaves Lansdown reported last week that NS&I customers were flocking to its cash savings hub after the government-backed arm announced severe rate cuts taking effect next month.

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