Savers have been warned their inaction could be costing them £1,222 a year. Experts at Hargreaves Lansdown have urged people to find out if they could get a better rate by switching to another provider as it could prove to be an expensive mistake.
The investment group pointed out that looking at the top 20 percent richest households, who have some £36,276 in cash, if they stuck with a big name bank rather than moving to the top rate on the market, they would be losing out on £1,222 a year.
One in three savers have not switched accounts in the past five years, a survey commissioned by the firm found.
Sarah Coles, head of personal finance, commented: “Despite all the movement in rates, three in five savers haven’t switched their savings in the past year and almost a third haven’t switched in the past five years.
“The whole notion of switching is off the table for millions of people. Almost a quarter of savers have never switched their savings and two fifths don’t have any plans to switch at any point in the future.”
Ms Coles highlighted the case of older Britons, saying it’s “particularly worrying” that 44 percent of those aged 55 and over have no plans to switch their provider in the future.
This is despite the fact that the conventional wisdom is that once you retire, you should have one to three years’ worth of emergency savings.
The drop in interest rates is has also put people off looking to switch, as 60 percent haven’t switched in the past year, compared to 53 percent six months ago.
The Bank of England dropped the base rate in August from 5.25 percent down to five percent, where it has been held since in the latest decisions, with many providers dropping their rates afterwards.
For those who are looking to switch, they may want to consider that they get bag some free cash in the process, as several banks have switching offers.
Santander recently launched an £150 offer when opening a current account with them, while others banks also have switching offers, including Barclays, Lloyds Bank and NatWest.
Amy Knight, personal finance expert at NerdWallet UK, said the banks may roll out more of these cash incentives as high rates persist.
She commented: “Spending announced in the Labour Budget could force the Bank of England to lower interest rates more cautiously to stay on top of inflation.
“Higher rates dampen the demand for borrowing and with fewer people shopping around for loans, we may well see banks using cash bonuses to draw in new customers, increasing deposits instead.”