Savers risk missing out on hundreds of pounds in interest as competition thrives

Overall product choice has reached a new record high – with more than half of accounts paying above the base rate.

Savers who let their money languish in low-paying accounts are being warned that they risk missing out on hundreds of pounds in potential interest as competition remains fierce among providers.

With many banks and building societies launching new savings accounts in recent weeks, overall product choice reached another record high for a sixth consecutive month – rising to 2,583 by the start of July, according to data from the latest Moneyfacts UK Savings Trends Treasury Report. What’s more, over half of accounts pay above the current Bank of England base rate (3.75%)^* – with this figure increasing to 1,385 month-on-month (its highest in over six years).

The combination of new products being launched and providers actively improving rates has also seen average returns on savings accounts (excluding ISAs) continue to climb between June and July. The typical easy access savings rate, for instance, rose from 2.48% to 2.53% month-on-month (its highest in almost a year), while the average notice savings rate increased from 3.36% to 3.40% over the same timeframe.

But, despite the positive momentum, new research from LHV Bank worryingly uncovered that over half (53%) of UK savers aren’t confident they’re earning a competitive return – meaning many might be being short-changed by a paltry savings rate.

How to get the most from your savings

Fortunately, there are steps savers can take which could help them get more for their money.

“The current condition of the savings market strongly favours active savers. Regularly reviewing and switching accounts can make a meaningful difference to how quickly savings grow, helping savers benefit from the most competitive rates available,” said Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk.

She encouraged savers to look beyond average rates, explaining that someone with £10,000 stashed in a typical easy access account might earn just £253 in interest over the course of a year (in contrast to around £500 in a top-paying account). “On larger balances, the benefit of switching becomes even more significant,” she added.

Alternatively, those who don’t need immediate access to their cash could consider locking it away in a fixed account to safeguard against the possibility of interest rates falling in the future. Average returns on a one-year bond rose from 4.19% to 4.22% in the month to July, while the typical rate paid by a longer-term bond (of over 550 days) went up from 4.21% to 4.24% during this time. In both cases, this marks five months of consecutive increases and the highest rates since 2024.