In a £600,000 campaign launched by city watchdog, the Financial Conduct Authority (FCA), savers are encouraged to compare deals to ensure best rates on cash deposits.
From today, savers will see the campaign run across radio, digital audio and social media, urging people to review their savings, as it highlights how quick the process is to switch for a better interest rate.
It comes as savings rates increased at pace following consecutive hikes to the Bank of England (BoE) base rate. While they’ve fallen from their peak, savers can still get 5% or more on their cash.
The FCA said it has seen signs of a “more competitive market emerging” as savers move their money to take advantage of higher rates.
In the six months to December 2023, the amount held in bank and building society accounts earning zero interest reduced by £13bn.
Meanwhile, cash held in easy-access accounts, which typically have lower interest rates, also reduced by £9bn.
At the same time, cash deposited in notice and fixed-term savings accounts, which tend to reward savers with higher rates for giving up access to cash for a period, saw £24bn added to the range.
But the FCA said it wants more people to move their cash to make the most of deals available.
The spotlight has been firmly on banking giants in recent weeks, as they have been criticised over their paltry rates and quizzed by MPs over their offerings to savers.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “We know that people can be put off switching for a variety of reasons, but they could be making their money work harder.
“There are some great rates out there and it could take as little as five minutes to find a better deal.”
‘Many reluctant to move their money’
Mark Hicks, head of active savings at Hargreaves Lansdown, said: “Anything the FCA can do to persuade people to switch for a better savings deal has to be positive. However, it’s going to take a serious and sustained effort to shift people from the easy-access accounts of high-street banks, where an awful lot of cash is stuck.
“Savings rates are higher now than they have been for more than a decade. Despite falling back slightly from peak rates, currently there are plenty of fixed and easy-access rates of over 5%. These are the kinds of rates savers wouldn’t have believed possible back in the doldrums of the pandemic. And yet, an awful lot of people have been reluctant to move their money.”
Hicks added: “For a wholehearted shift, people need to realise they can trust newer online banks, because they all have to follow the rules set by the FCA and provide the same protection under the FSCs. They need to know it doesn’t have to be a hassle to move. And they have to see that it’s well worth the effort. Someone in a high-street bank easy-access account paying just 1.65% can make more than three times the interest by shifting – which, for someone with £30,000 in savings, is an extra £1,000 per year.”
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