Research reveals people are staying way too loyal to their savings provider
Did you know one in four people (25%) have held their savings account for more than 10 years? That’s four times as long as people stay with their employer.
And unlike with some jobs, you’re unlikely to get a raise by sticking with the same savings provider for that long. In fact, you could be missing out on hundreds of pounds in interest.
We’ve done some joint research with our sister site, Smart Money People, into savings and switching to find out just how much the UK’s savers are missing out on and how we can help.
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Loyalty doesn’t pay
Our research revealed a LOT of people are very loyal to their savings provider.
A quarter (25%) have held most of their savings in the same account for more than a decade, and almost half (47%) have stuck with the same one between two and 10 years.
Over 55s are the most loyal with more than one in three people in this age group saying they’ve been with their savings provider for more than 10 years.
At Be Clever with Your Cash, we’re strong believers that loyalty never pays when it comes to your money.
Savings rates are significantly higher now than they were in previous years, which means you’re missing out if you’re still on old rates.
If we look at the average easy-access rate 10 years ago, it was 0.63% compared to 3.11% now, according to data firm Moneyfacts.
Our research revealed the average savings balance across all ages is £12,501 (that’s not including non-savers), so based on these rates you’d be earning around £79 a year in interest in 2014, compared to about £389 at today’s average rate.
But you shouldn’t settle for average rates either! You’d earn even more with the top accounts. For example, you can earn 5.18% with a one-year fix from SmartSave which would pay around £648 on savings of £12,501.
And don’t forget regular savers which are paying up to 7% right now, though you’ll need a current account with First Direct, Co-op or Lloyds bank to get the best paying ones.
You can find out all the best buy savings rates in our regularly updated article.
What about Cash Isas?
Over one in four (27%) keep most of their savings in a Cash ISA, according to our research.
And similar to savings rates, the average Cash ISA rate has also increased from 1.26% to 3.33% in the past 10 years.
At the 2014 rate you’d earn around £158 on a £12,501 pot compared to £416 at today’s average rate.
However, the top easy-access Cash ISA currently pays 5.1% from Chip although you can earn a slightly higher rate of 5.17% from Plum, if you make less than three withdrawals a year.
At these rates you’d earn £638 and £546 a year, respectively, on a balance of £12,501.
Get your switch on
We found out lots of people didn’t know you could move their savings.
Almost one in six (16%) weren’t aware or weren’t sure they could switch savings provider.
Unlike with current accounts, there’s no savings switching service. However, it’s still a straightforward process – you just open up a new account with your chosen provider and move the money over. If you’re not sure where to find the best rates, we update our top savings accounts page daily.
Almost a third (29%) of people say they would definitely consider switching their savings provider in the next six months and over half (59%) say they might.
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There were lots of reasons given for not wanting to switching. Some three in 10 (31%) said they didn’t want to take a risk with a new provider. That’s understandable with so many unknown names at the top of the tables – but you can always check customer reviews over at Smart Money People to get a heads up of any potential issues.
Almost one in four (24%) said they didn’t think switching was worth the ‘hassle’. That might be true if there’s a minimal difference in rates, or your balance is really small. But if you’ve not changed provider in years then the chances are you’re missing out.