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Savers Missing Out On Better Returns With Over Half Keeping Savings In Current Accounts
UK savers are missing out on earning a better return on their money by leaving savings in their current account, new research from digital bank Chase has found.
![Image by Orlando from Pixabay]()
Image by Orlando from Pixabay
The research, based on a survey of 2,000 UK consumers, found that half (57%) prefer to keep the majority of their money in a current account rather than a savings account. Reasons why include the beliefs that it’s easier to keep track of money in a current account (25%), they do not have enough money to justify a savings account (22%), their current accounts provide interest (13%) and the fear of not being able to access money when they need it (16%).
Successive rate hikes from the Bank of England has led to savings rates increasing to the highest levels in nearly two decades, with many savers taking advantage of easy access rates exceeding 5%. Meanwhile, most current accounts do not pay interest at all, and those that do often pay less interest than savings accounts.
Shaun Port, Managing Director for Savings at Chase said:
“Our research shows that millions of people across the country could be making their money work harder, simply by moving their savings into a high interest savings account.
"Nowadays, there are easy-access savings accounts which are simple to open and straightforward to use, provide you with much higher returns than current accounts and can offer access to your money whenever you need it, without being penalised. Even if you’re starting with a small amount of savings, it can make a real difference over time – the important thing is to just start.”
It’s more than just interest
The research shows that higher interest is not always a big enough incentive for consumers to make a move to a new savings provider. Despite 64% of UK savers being aware of better rates, only one in ten (11%) plan to change accounts - with the perceived hassle of moving (11%) and the belief that it wouldn’t make enough of a difference to make it worthwhile (17%) highlighted as barriers. Aside from interest, when it comes to choosing a savings account consumers also prioritise trust in the provider (37%), having no fees or penalties for accessing money (37%), the ease of using an app or online function (25%) and the ease of opening an account (24%).
Shaun Port continued:
“Interest rates are an important consideration, but consumers also really care about trust, flexibility, and ease. They want their savings account to be hassle-free and enable them to maximise their savings. Everyone’s circumstances are different, so choosing an option that’s right for you is what’s key.”
Time for a mid-year finance review
As we are at the halfway point of the year, Chase is also encouraging consumers to carry out a mid-year check of their finances, sharing four top tips to help build a more active approach to money management.
1. Look back and look forward: “Our research found that 60% of consumers feel they could save more money by cutting back on discretionary spending, yet only a quarter (27%) review their spending each month and 14% even admit they have no idea how much they spend. So, building a spending review into your monthly routine is crucial - planning ahead by a few months also helps make you aware of the bigger spending moments you need to put money aside for.”
2. Set a target - no matter how big or small: "For many people, the hardest part about saving is getting started. Having a clear goal - no matter how big or small – can be a great way to keep yourself on track. Sometimes, setting a larger savings target can feel overwhelming, leading to people changing back to old spending habits because it feels too ambitious. If that's the case, start small to make your savings goal more manageable. Even small steps matter, because they can lead to consistent change over time."
3. Make the most of bank account features: "There are lots of digital features which can be very useful when it comes to managing your money, but our research found that a third (34%) of consumers don't use any tools or methods to manage their saving and spending. Using features like spending pots and making the most of round-ups and cashback offers can really help to control spending and boost savings, especially over the summer months when social calendars typically get busier."
4. Review your subscriptions: “People in the UK spend on average £66 a month on subscriptions - including gyms, entertainment streaming services, delivery services or apps. Surprisingly, one in ten (11%) people admit they’ve previously signed up to a service they’ve never used, but still paid for it. So, reviewing your subscriptions is vital. You may find one you're not even using that you can cancel, providing your contract allows this and you won't incur any penalties. For delivery service subscriptions, think about the frequency of your order, and see if you can change it to a bi-monthly or quarterly delivery."