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The regions where savers get the worst returns on their money
Savers who prefer branch access could be missing out on the best rates
Savers in Wales are getting the lowest returns on their cash and are potentially missing out on hundreds of pounds in interest.
New research by Shawbrook Bank shows people in Northern Ireland and the southeast of England get the highest interest rates, averaging 3.8% AER. However, this is still significantly lower than the best savings and Isa rates currently on the market.
Here, Which? takes a closer look at the findings and explains why savers in some regions are not making the most of their money.
Where do savers get the best and worst rates?
Shawbrook Bank's research found that savers in some parts of the UK are getting better returns than others.
The provider analysed rates across all types of adult savings accounts and Isas, using data provided by business consultancy CACI.
The results show that savers in Northern Ireland and the southeast of England achieved average rates of 3.8% AER, while those in Wales earned just 3.54% AER on their money.
| Region | Average savings rate (AER) |
|---|---|
| Northern Ireland | 3.8% |
| Southeast | 3.8% |
| Yorkshire and the Humber | 3.73% |
| East of England | 3.73% |
| Southwest | 3.7% |
| Northeast | 3.68% |
| London | 3.68% |
Source: Shawbrook Bank/CACI. Based on a survey of more than 2,000 UK customers.
Why is there a regional rate gap?
It's hard to give just one reason why some savers earn less interest than others, as there are likely to be several factors contributing to the figures.
Adam Thrower, of Shawbrook Bank, says these can include a lack of financial awareness and a preference for local high street banks and building societies in some areas.
For example, savers in Wales are the most likely to manage their money in-branch, with 33% of respondents to Shawbrook's survey doing so.
As most of the top rates are currently offered by online or app-only challenger banks, a preference for branch access may mean missing out on the best rates.
Higher earners more likely to switch
Demographic factors such as income levels can also influence savings behaviour.
Recent research by the investment and savings platform Hargreaves Lansdown (HL) showed that the higher your income, the more likely you are to have switched to a better rate.
It found that a third of basic-rate taxpayers hadn’t switched for five years or more, compared to just one in five higher-rate taxpayers.
HL head of personal finance Sarah Coles says this may be because higher earners tend to have more money to save, so feel there’s more to be gained.
Coles adds that those on higher incomes might also be more inclined to do more research into the best rates.
HL's survey found that 54% of higher earners have heard of smaller online banks (compared to an overall average of 37%), and 61% have heard of online savings platforms (compared to an average of 30%).
- Find out more: what are the different types of savings account?
The best savings rates
Moneyfacts data shows the average rate for a one-year bond is currently 4.24% AER, or 3.89% for a fix lasting more than a year.
One-year and longer-term cash Isas offer average rates of 4.06% AER and 3.84% respectively.
Instant access deals are less generous – 3.03% AER for an instant access savings account and 3.24% for an instant access Isa – but you can still find some products that offer up to 5% AER.
The table shows the top rates currently available on fixed-term and instant-access savings accounts and cash Isas, ordered by term.
| One-year fixed rate | Isbank | 4.85% | n/a | £1,000 | Internet, mobile app | Yearly |
| One-year fixed rate Isa | Kent Reliance | 4.46% | n/a | £1,000 | Branch, internet | Monthly, on maturity |
| Two-year fixed rate | Atom Bank | 4.6% | 65% | £50 | Mobile app | Monthly, yearly |
| Two-year fixed rate Isa | Marsden BS | 4.3% | n/a | £5,000 | Internet | Yearly |
| Three-year fixed rate | GB Bank | 4.55% | n/a | £1,000 | Internet, mobile app | On maturity (compounded annually) |
| Three-year fixed rate Isa | UBL UK | 4.31% | n/a | £2,000 | Branch, internet, mobile app, postal | Anniversary, monthly, on maturity, quarterly |
| Four-year fixed rate | Oxbury Bank | 4.29% | n/a | £1,000 | Internet | Yearly |
Table notes: rates sourced from Moneyfacts on 8 November. Provider customer score is based on savers' overall satisfaction with the brand and how likely they are to recommend it to others. n/a means sample size was too small for us to generate a provider score (a) 5% interest on balances up to £3,000 (s) This is a Sharia-compliant product, and so offers an expected profit rate (EPR) as opposed to an annual equivalent rate (AER)
How much are savers missing out on?
As you can see, top accounts offer higher interest than the average rates earned by respondents to the Shawbrook survey.
Rate gaps can make a big difference. Let's say you deposit a lump sum of £5,000 in a one-year fixed-term account, paying the Welsh average of 3.54% AER.
At the end of the 12-month term, you'd make £177 in interest. If you opened the same type of account paying the current top rate of 4.85%, you'd earn £242 – that's £65 more.
If you're saving for a longer period of time, this can add up to hundreds of pounds.
- Find out more: how to switch your savings account
What next for savings rates?
Savings rates have been falling steadily for some time now, while rates on fixed-term accounts have sunk to their lowest levels in more than a year.
Moneyfacts data shows the average rate on a one-year bond has dropped more than one percentage point since hitting a high of 5.42% AER in October 2023. The average interest paid on a long-term bond has dropped by a similar amount.
Average rates on instant access accounts have experienced a smaller decline over recent months – slipping just 0.15 percentage points since March – but that could change after the Bank of England's decision to cut the base rate.
A drop in the base rate is usually bad news for savers, as banks often respond by reducing the interest paid on savings accounts.
If you're looking for a new savings account, our guide to the best savings accounts is updated weekly with the latest top rates. It also shows you the best savings providers based on customer experiences and expert Which? analysis.
