Savers urged to ‘scour the market’ as millions lose out on hundreds of pounds of interest | Personal Finance | Finance

Millions of savers have large amounts of savings getting just one percent interest or less when much better rates are available.

Almost one in 10 of all instant access accounts which earn a meagre one percent or less have balances of more than £10,000, meaning these savers are missing out on hundreds of pounds in interest each year.

A person with £10,000 in a savings account earning one percent would get just £100 in interest over the course of a year.

They could easily increase this to more than £400 a year by switching to one of the leading easy access accounts, with several providers offering more than four percent interest at the time of writing.

Derek Sprawling, director of savings at Paragon Bank, said: “I would urge savers to scour the market for better-paying accounts.”

Savers who are willing to lock up their savings for a fixed term could get even better rates, with top-paying rates for one year, 18-month and two year fixed rate bonds all at more than six percent.

Mr Sprawling said many savers have already been reviewing their savings. He said: “Fortunately, we have seen a strong uptick in savers moving their money more recently, with many switching to fixed-rate ISAs to protect their cash from tax.

“But, the amount still held in poor-paying accounts dwarfs that switching activity. With inflation remaining stubbornly high, it’s important that savers are rate savvy and make sure their cash is working hard for them.”

Several top-paying fixed rate ISAs currently offer more than five percent while several easy access ISAs offer four percent or more.

ISAs have a number of tax benefits as any interest earned or growth in the values of stocks and shares wrapped up in an ISA is not taxed, and a person does not pay tax on any income derived from an ISA.

A person can save up to £20,000 a year in ISAs and has the option to transfer over funds from another ISA.

Many banks and building societies have increased their interest rates over the past year and a half as the Bank of England has continually increased the base interest rate.

The central bank has consistently hiked the rate since December 2021 with the base rate currently at five percent.

Many analysts are predicting the base rate will continue to climb this year and could reach six percent or higher.

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