Savers staying with one of the big banks rather than switching to better-paying alternatives are collectively losing £3 billion a year (£65 a year each on average).
How instant access savings rates compare?
Over the past year, we’ve seen a new breed of lesser known banks offer the best savings rates, leaving the traditional banks languishing miles behind.
RCI Bank UK currently offers a market-leading instant-access deal, paying 1.65% AER.
Paragon Bank, Shawbrook Bank, Aldermore Bank and Charter Savings Bank are also challenging the big players by offering competitive rates (1.45% AER, 1.45% AER, 1.25% AER and 1.25% AER respectively).
In contrast, savers sticking with a big bank are getting significantly lower interest rates. For example, if you invested £10,000 in RCI Bank’s Freedom Account, you’ll earn £333 interest over two-years, compared to just £110 in Santander’s eSaver account.
Furthermore, Barclays Everyday Saver customers and Lloyds Easy Saver customers would earn considerably less, £50 and £60 respectively. That’s almost £300 lower than the top-paying account from RCI Bank UK.
The Which? Money Compare savings and Isa tables let you search hundreds of savings accounts and Isas from providers large and small to find a great savings rate based on quality of service as well as cost and benefits.
Which? Money Compare table: Instant-access savings accounts – compare hundreds of deals
Watch out for teaser rates
Accounts offering teaser rates to lure you in may seem attractive at first, but after the first year your interest rate may plummet.
For instance, four out of the seven big banks (Santander, Halifax, Bank of Scotland and Lloyds) featured in our chart below offer a short-term teaser rate.
Halifax customers will see the biggest rate drop after the first year as its Online Saver account pays 0.60% AER for the first year, but reverts to just 0.25% AER thereafter.
The chart below shows how much you can earn on a £10,000 deposit with a top-paying challenger bank versus as instant access account from a big bank. It includes any teaser rate in the first year and the subsequent go-to rate.
[a] Interest on 0.60% AER includes 0.10% AER bonus in year one. Rate is 0.50% AER in year two. [b] Interest on 0.60% AER includes 0.35% AER bonus in year one. Rate is 0.25% AER in year two. [c] Interest on 0.60% AER includes 0.30% AER bonus in year one. Rate is 0.20% AER in year two. [d] Interest on 0.60% AER includes 0.10% AER bonus in year one. Rate is 0.25% AER in year two.
If you haven’t used up your 2015/16 cash Isa allowance
The Which? Money Compare tables also compare hundreds of cash Isas, so it’s easy to find a great savings rate. If you’re looking for the best stocks and shares Isa, you can watch our short video which explains what to look for.
- To find out how much interest you’re getting see our savings rate booster tool
- Read our expert guide on how to find the best savings account
- Use our tool to find out whether your savings are protected under the FSCS
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.