Martin Lewis issues urgent saving warning as millions of Britons being 'ripped off'
Published: 10/05/2023- 14:56
An urgent warning has been issued by Martin Lewis for Britons who have savings or cash ISAs as he reveals that people are being "ripped off" by banks.
The Money Saving Expert claims that millions of people are missing out on hundreds of pounds in interest while saving rates are at their highest level for over a decade.
In his newsletter on Tuesday, Lewis explained that households are being "ripped off" by banking in low-interest savings accounts.
"Savings rates are at their highest level for 14 years. No surprise after 11 consecutive UK base rate rises," he wrote.
"And another is highly touted this Thursday - it's predicted to jump from 4.25 per cent to 4.5 per cent - some of which is likely already factored in to the current rates.
"Yet millions of people have money in savings and cash ISAs, earning far less than 1 per cent - with banks taking advantage of customer inertia. Stop 'em ripping you off. Check yours now".
He then revealed the top saving options available for people who want more from their money.
Lewis suggested that people could benefit from early access savings which is one of the simplest form of savings, and usually allow unlimited cash withdrawals.
However, the perk means they tend to come with lower interest returns.
Options include app-only Chip (3.71 per cent interest rate), Cynergy Bank (3.55 per cent with a one-year 0.34 per cent bonus), Post Office (3.47 per cent with unlimited withdrawals, minimum £1), Sainsbury's Bank (3.37 per cent, minimum £1,000), Nationwide (3.2 per cent, minimum £1) and Chase Bank (3.1 per cent on up to £500,000).
In addition, fixed-rate savings can also benefit consumers with some of the highest interest rates.
However, if interest rates increase during your term you can't move your money and switch to a better account.
Lewis suggests Atom with their 4.2 per cent interest rate with a minimum of £50 in the account.
He also listed SmartSave (4.87 per cent, minimum £10,000) and Isbank (4.9 per cent, minimum £5,000) via the savings marketplace Raisin or Charter Savings Bank 4.9 per cent AER (min £5,000).
But he warned: "Beware a fixed-rate interest tax trap. If you have a fix, the interest crystallises for tax when you can access it, so some may want it paid monthly so they can spread out the interest over years, rather than get it in one lump which may push you up a tax bracket".
Finally, the finance experts says people could take advantage of cash ISAs and although rates are up, they still pay less than normal savings.
He advises that Britons with a cash ISA should check what they earn now - even if they're fixed.
For easy-access he listed Cynergy Bank (3.5 per cent) in the number one spot, with a minimum of £1 in the account, tax-free savings, 25/7 withdrawals and transfers-in accepted at the time of application.
For a one-year fix, Lewis named Secure Trust Bank (4.3 per cent), with a minimum of £1,000 initial investment, and the ability to save up to £20,000.
The MoneySavingExpert added: "If your existing cash ISA earns less, most of the above allow you to transfer them in.
"To do this, just apply for a new cash ISA, and as part of the application you'll be asked if you want to transfer your existing cash ISA over (don't just withdraw cash to move it, then it loses its 'cash ISA' status)".