consumers across the UK are remaining hesitant to switch from high street banks despite being aware that they could secure better rates elsewhere, new research from SmartSave has found.
SmartSave, run by digital bank Chetwood Financial, commissioned an independent survey of 2,000 UK adults. It found that only a third (34%) have opened a savings account with a new bank or savings provider in the past two years.
Of those who have not made changes to who they save with, most (62%) say they are aware that they might be able to secure better rates with another provider.
In July, the Financial Conduct Authority (FCA) summoned UK bank bosses to a meeting amid concerns that they have been profiting from the rising Bank of England base rate (BBR) by failing to offer better savings rates to customers while the costs of mortgages and loans have increased significantly.
Some easy access savings accounts are still offering interest rates of just 1%, or less, while 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.
However, despite the widespread knowledge that they could achieve better returns on their savings by switching providers, 46% of those who have not switched say they are reluctant to because they have held their savings with the same provider for five years or more.
Further, 30% of those who have not changed savings provider say they do not have time to research alternative banks to move their savings to, while 15% do not know how to do so. Three in ten (30%) are waiting to see if interest rates increase further before potentially moving their savings.
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, giving 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.
“While 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.”