Billions of pounds going down the drain - Savings - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Billions of pounds going down the drain

Billions of pounds going down the drain

Category: Savings

Updated: 17/12/2012
First Published: 26/10/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Consumers are missing out on billions of pounds every year by leaving their savings in low interest accounts. Almost half of savings accounts offer 0.5% interest or less, while one in four pays a miserly 0.1% or less – equating to just £1 a year for every £1,000 saved.

There are even examples of accounts paying rates of as little as 0.01%, meaning savers would be credited with just 10p for every £1,000 they saved. The rock bottom interest rates are costing savers more than £12 billion a year, new research from Which? has found.

If people with easy access, notice accounts and Cash ISAs decided to move their funds to the best rate versions of their savings account, they would be the equivalent of £322 better off per year.

With economic conditions still tough, many people will be shocked to hear that they could be losing out on such a vast sum. The good news is there are plenty of accounts on the market that offer interest rates worth their savings salt.

If it's ease of use you're after, there are a number of decent accounts that can be opened with just £1 and allow withdrawals to be made.

The Halifax Web Saver Extra offers a variable rate of 2.60% and unlimited withdrawals (one withdrawal a year with no loss of interest). Making any further withdrawals will result in loss of interest equivalent to 30 days' interest (on the amount you withdraw).

If you're likely to withdraw money at regular intervals, an account that offers unlimited notice free withdrawals is more suited to your needs.

To this end, you can take your money out to your heart's content with Rock's E-Saver Issue 3. As well as this, the account can be opened with just £1 and savers will benefit from a variable rate of 2.50%.

The same rate is available with Barnsley BS's Online Saver Issue 2. Applications can be made online and the product opened with as little as £1.

Even higher rates of interest can be had if you're prepared to lock your money away.

Northern Rock offers a rate of 3.05% to savers investing into its E-Bond Issue 2. The rate is fixed until 20.01.12 and the minimum investment is only £1.

Furthermore, rates of 3.04% and 3.00% can be had by saving into the respective one year bonds from Barnsley BS (minimum investment £100) and the Post Office (minimum investment £500).

You can instantly see what other accounts are paying by using our Savings comparison chart.

Our compare button allows you to evaluate up to three accounts side by side, helping to pin point the account that will best suit your needs. You can also use our handy monthly savings plan tool to find out how much you could save and earn from each account. Enter the amount you want to save each month and the interest rate of the account you are investing.

Find the best savings rates for you - Compare savings accounts

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.