21 February 2008
Investec warns that millions of savers could be missing out on more competitive interest rates than they are currently receiving on their accounts because they have not switched to a higher-rate savings account following recent reductions in the Bank of England's base rate.
It reveals that just 18 per cent of regular savers knows the exact rate on all
their savings accounts.
Linda McBain, head of banking at Investec Private Bank, says, ‘It appears that people are saving less each month as they tighten their belts. This coupled with the fact that a third of savers are unaware of the interest rate they are getting from their bank or building society, should be a great cause for concern.'
According to Investec, a quarter of savers are currently depositing between £201 and £500 per month, down 27 per cent from six months previously, while 1.4 million are putting aside between £501 and £1,000 each month. Meanwhile, over 310,000 people are depositing more than £1,000 per month in a bank or building society.
Investec warns that savers with large balances (£25,000 or more) are potentially losing out on hundreds of pounds in interest each year by leaving their money languishing in lower-rate savings accounts.
For instance, analysis of its latest Savings Index reveals that between 27 July and 27 October 2007 the average rate of interest was 3.43 per cent lower than the best possible returns for accounts with balances of £1, potentially leaving savers who have £25,000 deposited around £857 out of pocket over the course of the year.
McBain adds, "There are a number of good accounts for savers to choose from, but it is important that they look at the promises behind the headline rate. Some accounts make short-term rate promises while others are based on bonuses.
Men are likely to save, on average, £70 more than women, who put aside around £199 per month. However, the most prolific savers are those aged 55 to 64 years and those living in London, who save £277 per month and £303 per month respectively.