Many consumers across the UK are remaining hesitant to switch banks. This is despite being aware they could secure better savings rates elsewhere, according to research from SmartSave. So why aren’t they moving? According to SmartSave, run by digital bank Chetwood Financial, 30% say they don’t have time. Another 15% say that they do not know how to transfer savings between providers. The report notes that only a third (34%) of UK savers have opened a savings account with a new bank or savings provider in the past two years.
In July, the FCA summoned UK bank bosses to a meeting amid concerns they were failing to offer better savings rates to customers while the costs of mortgages and loans have increased significantly.
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Some easy access savings accounts are still offering interest rates of just 1%, or less. Meantime, there are one-year fixed-term savings accounts offering interest rates in excess of 6%. Moving £5,000 from one of the worst-performing easy access accounts into one of the better-performing one-year fixed products would earn them £250 more in interest over the course of 12 months.
Loyalty to banks is hurting many savers
Andy Mielczarek, Founder and CEO of SmartSave, said: “UK inflation hit a 41-year high almost a year ago. During this time, Britons’ savings have been diminishing in real-term value. Rising interest rates and the eventual decline of inflation have promised to reset the balance somewhat. This gives consumers the chance to achieve far better returns on their savings. However, it has become clear that loyalty to banks that are failing to pass on higher interest rates is hurting many savers.
“Customer loyalty has been stretched in recent years. Our research highlights that there is still a preference for the perceived ease of staying put. However, it’s important that consumers understand that looking beyond the traditional high street banks – and to fixed-term products, if it is an option for them to set savings aside for a longer period – can provide an opportunity to benefit from higher interest rates than they may currently be receiving.”
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