UK Savings Week: More than a third of savers fail to compare rates
The annual event was started last year by the Building Societies Association (BSA), and is a collaboration between a number of building societies, credit unions, consumer groups and debt charities.
The aim is to raise awareness about the importance of saving. Rather than promote specific savings accounts or providers, it serves as a focal point for increasing consumer engagement and support around savings.
Research by the BSA found that more than a third (34%) of UK savers never compare the rate on their savings accounts to others available in the market – potentially missing out on more than £1,000 of extra income.
In addition, three in 10 (30%) revealed they never check what their rates are with their own bank or building society, with many Brits potentially missing out on free money by holding their savings in accounts offering paltry rates.
The BSA also found that more than a third (34%) of consumers hold most of their savings in a current account, which offers little or no interest, and almost one in 10 (9%) savers haven’t reviewed their accounts for a year or more.
An ad-hoc approach to saving is popular among Brits, with a third (33%) of savers putting money aside whenever they can, and 34% saving whatever they can afford at the end of the month.
Of those who do have savings, the average amount stashed away is £21,840, though more than half (52%) of people have less than £12,000.
Shopping around can make a big difference to savings
Robin Fieth, BSA chief executive, said: “Despite lots of media and Government attention on savings rates following the significant increases in the bank rate, it’s perhaps surprising that the level of engagement people have with their personal finances remains fairly low. As savings rates have been increasing over recent months, shopping around can now make a sizeable difference to the returns available.
“It’s encouraging that many of those who currently do not have any savings are confident they can start saving every month, and there are lots of different savings accounts available for all levels of savers.
“Every small contribution made to a savings pot can go a long way, but the key to this is starting a savings habit. We all know life gets in the way, and savings, understandably, can slip down the priority list. But taking the thought out of saving and putting away a set amount at the start of each month – for however much you can comfortably afford – can be a great way to make it a habit and achieve your savings goals.”
According to UK Savings Week, there are about 11.5 million people in the UK who have less than £100 of savings to fall back on in an emergency.
UK Savings Week invites consumers to #takethesavingschallenge which encourages users to “set your goal”, “make it a habit” and “reward yourself”.
According to a study by Hargreaves Lansdown, an estimated £25-35bn is in fixed rate accounts that will mature in the next six months.
£1.5bn in lost interest
Assuming we don’t do anything with this cash, and £35bn rolls over into easy access accounts paying 2%, we could miss out on a collective £1.5bn in interest (compared to fixing for a year at 6.2%).
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We’re now a year on from when a flood of savers started to opt into fixed rate accounts. Active Savings statistics show that last September, savings being fixed were up around 75% from a year earlier. This intensified in October and November, when the money flooding into fixed rates more than tripled compared to a year earlier. This was reflected across the wider savings market.
“It means that up to £35bn may be set to mature, at a time when rates are higher than they’ve been for years. Relentlessly rising Bank of England rates, and a flurry of competition from smaller and newer banks and building societies, means you can currently fix over one year at around 6% or more.”