You carefully squirrel away a few pounds a month in the hope that you'll build up a healthy savings pot, but the question is, do you know how much you're actually earning from your hard-earned cash? It seems that a worrying number of savers can't answer this most basic of questions, and if you're one of them, you could be falling at the first hurdle.
Research from Charter Savings Bank, in conjunction with YouGov, has found that 32% of respondents with savings don't know the current interest rate on their primary savings account, while almost a fifth (17%) admit to never having checked the rate of it. This could mean you're actually earning far less than you thought, particularly if you opened an account that came with an introductory bonus, because it could well have fallen away by now.
The figures show that, in reality, more than a fifth (21%) of savers are earning 0.50% interest or less on their primary savings account – that's less than base rate. Given that the average UK savings pot totals £8,500, this equates to an average annual interest of just £43 a year before tax, so unless you're paying into a cash ISA, you'll end up with even less.
This all suggests that, even though many people are becoming regular savers, they're simply not engaging with their money enough to be earning the returns they should. Even a simple review of your account every year could be all it takes to get the returns you're after – if you're saving into a variable rate account, don't be afraid to switch if your rate is less than competitive, because you could easily be losing out.
"High street banks are offering little more to UK savers than a secure location for their savings," said Paul Whitlock, director of Savings at Charter Savings Bank. "With returns from high street banks so low, it's no surprise UK savers have literally lost interest in their savings. People are simply not aware of how much harder their money could be working for them."
As such, he's urging savers to be more engaged with their returns and become "savvier with savings", because as he says, "it's not just about saving more, it's about saving smarter". Why not think outside the box? Saving little and often is age-old advice that should always be adhered to, but it could be time to change the way you think about where you put those savings.
What about challenger banks? These lesser known names are dominating the best buy tables at the moment, and with good reason – their rates are highly competitive, and some savers could be earning more than four times as much interest with a challenger than they currently do with their high street bank.
"Savers should take a look at the best rates on the market and think carefully about how their money can work hardest for them," added Paul, and we quite agree. Check out our best buys to get a rundown of the top-paying accounts – most of them from challengers – and then stay on top of things by regularly reviewing your savings pot to make sure your money's consistently working as hard as possible.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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