Savers are being urged to be “mindful” as millions have missed out on a “huge” interest rate boost worth £457, according to Coventry Building Society.
Some savers have benefited from the Bank of England’s decision to raise the base rate to 5.25 per cent with the boost being passed down to savings accounts.
However, recent research from Coventry suggests many are not taking advantage of these bolstered rates.
The building society’sanalysis of the Bank of England data found that balances in easy access savings accounts plummeted by £100billion last year, representing the biggest drop since the financial crisis.
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Millions of savers are not taking advantage of hiked savings interest rates
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Figures from the central bank also showed that on average £258billion, which is over a fifth of all easy access funds, earned no interest throughout 2023.
This means that savers in the UK missed out on £457 each by simply not checking the rate on their savings and switching to better paying accounts.
According to research carried out by TotallyMoney, savers could earn an extra £913.40 if they swap to a leading one-year fixed-rate bond or an additional £920.35 with the top 90-day notice saver.
The personal finance app has warned millions of Britons are missing out on the best interest rates with 37 per cent of people not switching in five years and 27 per cent having never switched.
Furthermore, a survey conducted by TotallyMoney found that just 52 per cent of savers have switched or plan to switch accounts.
Jeremy Cox, the head of Strategy at Coventry Building Society, warned that the UK has “lost its savings habit” from last year.
He said: “With over a quarter of a trillion of pounds still languishing in accounts earning zero per cent interest, households not only felt the savings squeeze, but also lost out on hundreds of pounds worth of interest by not moving the savings they had into better paying accounts.
“And that’s on top of the impact high inflation had on the amount people can buy with their savings throughout 2023.”
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The Bank of England base rate is at a 15-year high of 5.25 per cent GB NEWSDespite this, the savings expert highlighted that bank and building society customers still have the opportunity to earn more from high interest accounts.
Mr Cox added: “There’s still a huge opportunity for people to look at their finances and give themselves a pay rise in 2024 - with rates of around five per cent readily available on flexible accounts, moving £10,000 could earn £500 a year in interest with access to take money out when needed.
“The good news is that current savings rates are now higher than inflation too.
Household savings jumped by just two per cent year on year, with an increase of £36billon which is the lowest level of annual growth seen in 15 years, the Bank of England found.
Despite this, cash held in both fixed accounts and ISAs increased in 2023 by £71billion and £47billion, respectively.