How to switch your savings account
If you want to make your cash work harder, it could be worth switching to a savings account that pays a higher interest rate.
The problem is, we're not very good at doing it. Research from the Financial Conduct Authority carried out last year found that just 9% of people switched savings provider in the past three years.
Almost a quarter of people have held the same savings account for the past decade.
If this sounds like you, you're likely missing out on a better rate. Our step-by-step guide explains exactly how to do switch your savings account and where to find the best rates.
1. Decide which type of account you need
There are pros and cons to each kind of savings account, so you'll need to weigh up what kind of deal works best for you.
- Good for: higher savings rates
- Bad for: anyone who needs to access their money before the term is over - withdrawals will either be impossible or will come with some kind of penalty that'll mean you'll lose out on interest.
- Good for: those who are able to save money every month
- Bad for: those who don't have/don't want to have a linked current account that many providers require
- Good for: those who can plan their spending up to 120 days ahead of time
- Bad for: anyone who needs to access their cash urgently
- Good for: being able to withdraw your cash straightaway
- Bad for: getting an interest rate that matches or beats inflation
2. Compare the best cash Isa and savings rates
Once you've decided what kind of account you want, you'll need to look into the interest rates on offer, and how much more you could make from your savings.
The Which? savings booster tool can calculate how much extra interest you'd earn by switching provider. You can enter savings amounts up to £100,000.
You can also search for and compare hundreds of savings accounts and cash Isas with Which? Money Compare. You'll also find some of the key terms for each account, and can click through to set one up.
3. Check for tricky terms and conditions
Before opening a new account, make sure you check its terms.
Common things that might catch you out include:
- instant-access accounts that have restrictions on the number of withdrawals you can make
- 'bonus rates' that are reduced after a certain amount of time
- minimum initial deposits - these can range from £1 to thousands of pounds, and they're required just to open the account
- maximum and minimum deposit and withdrawal amounts
- being unable to deposit or withdraw money for certain terms.
4. Transfer your money to your new account
Once you've opened your new account, it's time to transfer the funds from your old account.
If you're transferring an Isa, there's only one way to do it: fill in a transfer form with your new Isa provider.
Many providers allow you to do this online. Once you've sent off the form, your new provider will get in touch with your old provider to make the arrangements.
The transfer process should be complete within 15 working days. Find out more in our guide to how to transfer your cash Isa.
If you're transferring a savings account, you'll need to check what your options are with your current provider.
Some providers allow you to make a BACS transfer straight to your new account. Others will require you to transfer the money to a current account first.
It may also be possible for your new provider to initiate a Direct Debit from your old account.
5. Keep tabs on your interest rate
Once you've switched savings accounts, don't rest on your laurels. If the new savings account has an introductory bonus, make a note of when it ends, as you may want to switch again to make sure you're still getting a good deal.
Your provider may write to you with reassuring language like 'you don't need to do anything' - but if you don't switch, you could be missing out on interest.
If it's a variable rate account, keep an eye on your rate to make sure it stays competitive.
Find out more: How to find the best savings account