Derin Clark

Derin Clark

Online Reporter
Published: 05/05/2020

Savers are urged to switch their old easy access accounts as our exclusive research shows that many of these accounts will have seen their interest rate fall since the beginning of 2020.

In fact, the average rate for an easy access account that is closed to new business is 0.61%*, compared to the best easy access rate which is available today of 1.20%. This means that those with a balance of £85,000 could earn an additional £501.50 in interest over 12 months simply by switching.

Closed easy access accounts rates fall

Our research into closed easy access savings accounts has found that since the beginning of 2020 challenger banks have paid the highest average interest rate and maintained this up to the 1st May. Meanwhile, as the table below shows, the average rate being offered by high street banks has fallen by 0.08%, from 0.57% in January to 0.49% on the 1st May and the rate being offered by building societies has fallen by 0.18%, from 0.77% to 0.59% during their same period.

 

The average rate paid on a closed easy access account

  January 2020 February 2020 March 2020 April 2020 May 2020
Challenger banks 1.14% 1.14% 1.14% 1.14% 1.14%
Building societies 0.77% 0.76% 0.75% 0.76% 0.59%
High street banks 0.57% 0.53% 0.49% 0.49% 0.49%
All providers 0.70% 0.69% 0.67% 0.68% 0.61%

 

Number of closed accounts rises

During the same period the total number of closed easy access accounts has increased, which means that more savers are likely to find that their account is now closed when compared to the beginning of the year. As the table below shows, a total of 68 accounts have closed since January, with 48 of these being closed since March.

 

Total number of closed easy access savings accounts

  January 2020 February 2020 March 2020 April 2020 May 2020
Challenger banks 57 59 62 64 66
Building societies 326 349 347 376 370
High street banks 235 236 237 243 249
All providers 880 900 900 940 948

Easy access accounts rates fall

In addition to this, our research has also found that within the last month, rates have been reduced on 117 closed easy access accounts, with building societies reducing rates on 109 accounts and high street banks reducing rates on eight accounts, while challenger banks have not reduced rates on any such accounts during this period.

Within the last month, the biggest rate reduction was by Nationwide Building Society, which reduced the rate on its Single Access Saver Issue 1 (0-1 withdrawal pa) by 1.75%. Of high street banks, the biggest rate reduction on a closed account came from Britannia, which reduced the rate on its Select Access Saver 9 (0-4 withdrawals pa) by 0.40%.

Overall, as the table below shows, despite base rate falling to a historic low of 0.10% during March, more accounts now pay the same as base rate, while there are a number that pay less than 0.10%. This means that with the rate reductions most savers are likely to be getting a worse rate than before the base rate cuts in March.

 

Number of accounts paying exactly at base rate

  January 2020 (base rate 0.75%) February 2020 (base rate 0.75%) March 2020 (base rate 0.75%) April 2020 (base rate 0.10%) May 2020 (base rate 0.10%)
Challenger banks 3 3 4 0 0
Building societies 25 16 15 22 31
High street banks 2 2 0 21 21

 

Number of accounts paying less than base rate

  January 2020 (base rate 0.75%) February 2020 (base rate 0.75%) March 2020 (base rate 0.75%) April 2020 (base rate 0.10%) May 2020 (base rate 0.10%)
Challenger banks 6 6 6 0 0
Building societies 141 164 165 0 21
High street banks 161 177 193 3 9

Switching savings account

As the above tables show, although the base rate now sits at a historic low, there is still a significant number of easy access accounts paying rates at or below base rate. By staying with an easy access account paying the same rate as base rate, savers will be missing out on earning up to 12 times the amount they could accumulate a year by switching to the highest-paying rate currently available in the easy access chart. For example, a saver with £5,000 in an easy access savings account paying the current base rate of 0.10% will be earning just £5 a year, however if they switched to RCI Bank UK’s Freedom Savings Account, which currently pays the top easy access rate of 1.20% gross, they will earn £60 per year on the same deposit.

Alternatively, the currently second-best easy access rate of 1.19% gross, which is available on accounts from Investec Bank, Marcus by Goldman Sachs® and SAGA, will still offer savers a significantly higher interest rate than the average rate on closed easy access accounts.

 

*Note: all rates are AER unless otherwise specified

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.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy