Households with £10,000 in a bank account are being urged to check where their savings are held, as leaving cash in a low-paying account could cost them more than £300 a year. Some of Britain's biggest banks are paying savers as little as 0.75 per cent interest, while the best building society accounts offer rates of up to 4.50 per cent.
According to figures from Moneyfactscompare.co.uk, someone with £10,000 in an average big-bank easy-access account would earn just £116 in interest after 12 months. The same £10,000 placed in a leading building society account would earn £422 over the same period.
Inflation erodes savings value
The gap becomes even more stark once inflation is taken into account. For someone with £10,000 in a typical big-bank account, the real value of their savings would fall by £194 after 12 months. In contrast, someone earning a leading building society rate would still be £112 better off in real terms after inflation.
Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, said: "Savers could be missing out on hundreds of pounds simply by leaving their cash in a lower-paying account."
She added: "UK Savings Week is a great opportunity for savers to review where their money is held, because the difference between savings rates can have a significant impact on returns over time."
Experts urge savers to act now
Eastell emphasised that improving savings outcomes is not always about depositing more money each month. "At a time when households are under pressure, improving savings outcomes is not always about putting more money away each month. It can be about saving smarter by making sure their cash is earning a competitive rate," she said.
The warning comes as Chase launched its first Regular Saver, a new savings account designed to help customers make progress towards their savings goals. With Chase's Regular Saver, customers can save up to £300 a month at 6.5 per cent interest, meaning someone saving the maximum each month could accumulate up to £3,725 after 12 months, including £125 worth of interest.
New savings options on the market
The rate is fixed for 12 months, after which customers' savings are transferred to a chosen Chase account and the Regular Saver automatically continues. This makes it easy for customers to keep building their savings without needing to open a new account.
With such a wide range of rates available, from 0.75 per cent at some big banks to 6.5 per cent on the new Chase Regular Saver, the potential difference in returns is substantial. Savers who review their accounts and switch to higher-paying options can protect their cash from inflation and earn hundreds of pounds more each year.
