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Rhiannon Philps

Content Writer
Published: 30/06/2025
savings jar full of coins

Average rates on closed savings accounts have consistently sat below their live equivalents for the past three years.

 

Savers who leave their money sitting in the same savings account for years could be missing out on hundreds of pounds of interest.

Since June 2022, the average interest rate on a closed savings account (those that are no longer available to new customers) has been lower than the average rate offered by “live” savings accounts that are open to new customers. This is according to recent analysis by Moneyfactscompare.co.uk.

The margin of difference was greatest in October 2023, when the average easy access live savings rate was 3.18%, 0.66 percentage points higher than the average of 2.52% paid on the closed equivalent.

While this only equates to a difference of £66 in interest over one year on a £10,000 deposit, this rises to £165 if you have £25,000 in savings. Moreover, because this is based on average rates, the difference will be even higher if you put your money in one of the leading savings accounts on the market.

The difference between the average live and closed easy access savings account has narrowed in recent months, standing at 0.05 percentage points at the start of June 2025. But, while this may appear encouraging, much of this is due to falling savings rates, with the average open account now paying 2.74%.

“Savers who don’t review and switch from their closed easy access accounts have been getting short-changed for too long,” Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, pointed out.

“Customer loyalty is still not being repaid and not every closed savings account will fall in line with the Consumer Duty rules, which have been in effect for almost an entire year,” she added.

What is Consumer Duty?

The Financial Conduct Authority (FCA) introduced Consumer Duty rules on open savings products on 31 July 2023 and on closed products one year later. These rules mean that providers need to offer products that are fair value and provide good outcomes to consumers.

Getting more from your savings

Some savers may feel there is little point in moving their money, particularly if they don’t have much in savings and if they see that interest rates are on a downwards trend.

However, Springall points out that “any indifference about moving pots is dangerous, particularly when inflation erodes the real return on savers’ hard-earned cash”.

For example, £10,000 saved in one of the leading easy access savings accounts paying an inflation-beating 4.50% AER could earn around £181 more per year than if it was left in an “average” closed account paying 2.69%.

As a result, those who are proactive and regularly move their money to take advantage of the best rates currently available are likely to be getting a much better return on their savings. See how much you could earn on your savings with our savings calculator.

Savers who keep their money with a well-known high street bank are particularly at risk of getting a paltry return on their savings, with many brands paying less than 1.50%. This is almost half of the sum paid by the market average and around one-third of the leading easy access account.

“Savers need to look beyond the most prominent brands, as challenger banks and mutuals are working much harder to entice deposits,” Springall explained. For example, the top three easy access savings accounts currently all come from digital, app-only providers.

Last updated: 30/06/2025

Avoiding the tax trap

If savers switch their savings to higher-paying accounts, there’s a risk that they could breach their Personal Savings Allowance (PSA) and start to pay tax on the interest they earn.

The PSA is set at £1,000 for basic-rate taxpayers but drops to £500 for higher-rate taxpayers and £0 for additional-rate taxpayers.

As income tax thresholds are frozen until 2028, more savers may find they are dragged into a higher tax threshold over the coming years. Indeed, recent data from HMRC revealed that over seven million people may be paying higher-rate tax in the 2025/26 tax-year.

Because of this, ISAs, which allow you to deposit up to £20,000 each year without paying any income tax on the interest earned, are likely to be increasingly attractive. Furthermore, with the leading easy access cash ISAs currently paying similar rates to the top standard savings accounts, savers can earn just as much interest, if not more, by taking advantage of their tax-free ISA allowance.

Discover the best ISA rates

Whether you’re looking for an easy access ISA or a fixed rate ISA, our charts are regularly updated to show you the best rates currently available.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfactscompare.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.