Don't bank on it: savers missing out up to £465 a year by not shopping around
- Best and worst savings accounts are whopping 1.76% apart on average
- Savers with a £5,000 nest egg stand to lose more than £450 over five years
- But for the average UK saver that rises to £465 EVERY YEAR
London, September 2018 - The average UK saver stands to lose £465 A YEAR by not shopping around, new analysis by Gatehouse Bank reveals today.
Across four of the UK’s most popular types of savings accounts there is a 1.76% difference in the best and worst returns1 on average.
For the average UK saver, who has a nest egg of £26,4032, the cost of failing to shop around is as much as £465 in just one year, Gatehouse Bank’s analysis shows.
The potential losses become even more stark when the effect of compounding is taken into account.
Over a five year period, the average saver who places their nestegg in one of the lowest paying accounts would miss out on a staggering £2,407.
TABLE: Cost of failing to shop around
|
Average difference in returns after: |
Amount deposited |
|||
|
£5,000 |
£10,000 |
£26,4032 |
£50,000 |
|
|
1 year |
£88 |
£176 |
£465 |
£880 |
|
2 Years |
£178 |
£355 |
£938 |
£1,775 |
|
3 Years |
£269 |
£537 |
£1,419 |
£2,687 |
|
4 Years |
£361 |
£723 |
£1,908 |
£3,614 |
|
5 Years |
£456 |
£912 |
£2,407 |
£4,558 |
The analysis comes after previous Gatehouse Bank research found that challenger banks were eclipsing the High Street’s big names with savings rates more than 1% higher on average3.
With many banks and building societies yet to pass on the Bank of England’s recent 0.25% Base Rate rise to customers, it is as important as ever to shop around for accounts that offer competitive returns.
Gatehouse Bank’s expected profit rate on notice accounts has increased by the full 0.25%.
Charles Haresnape, CEO, Gatehouse Bank, comments:
“It is no secret that UK savers have been swimming against the tide of inflation for years but this analysis shows there are huge gains to be made if you’re prepared to shop around.
“It’s common for people to hold all their bank and savings accounts in one place for the sake of either ease or loyalty, but this can come at a cost. The reality is, in this low interest rate environment, savers need to travel to make their money work harder
“While on the surface the difference of one or two percent may not feel like much, in reality it can be worth thousands of pounds in no time at all.
“In recent times, smaller ‘challenger’ banks have typically offered the best returns and savers have everything to gain by finding a new home for their money.”
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1Average percentage difference between highest and lowest paying: Easy Access; One Year Fixed; Two Year Fixed; Three Year Fixed accounts. Rates correct as of 10th September 2018.
2SOURCE: https://www.sunlife.co.uk/siteassets/documents/cash-happy/cash-happy-report-2017.pdf