Reassessing the state of your savings and the rates of interest being offered by the account you’re using can be crucial to the effectiveness of any effort to increase your assets. And the latest evidence to that effect has been delivered by a new study on the subject from the independent financial research company Defaqto.
As most savers will testify, the past few years have been very difficult indeed for anyone aiming to find worthwhile, let alone generous, rates of interest on their instant saver accounts. The primary reason is simply that the Bank of England has now had its base rate of interest at an historic low of 0.5 percent for three years. That stringent monetary policy has seen banks and finance firms typically offering only miserly rates of interest but the situation is changing and has in fact varied considerably over the course of recent years.
Defaqto’s figures in fact point to a dramatic discrepancy between the interest generated by the savviest savers as compared with those who have simply left their savings in the same account since rates hit rock bottom in 2009. According to the numbers, the most effective account switching over the past three years could have generated an extra £71.73 in interest to £1,000 in savings. Whereas leaving the same amount in the lowest paying savings account for that entire period would have generated as little as £0.24, a disappointing return by anyone’s standards.
And while £71.73 might not sound like a stellar return on a thousand pounds over a 36-month period, it is almost 300 times more than the interest accrued by the least dynamic savers. The message from Defaqto, and the point in general, is clear enough that when it comes to savings accounts it really pays off to do your homework and keep a close eye on new products being brought to market. Indeed, despite the Bank of England’s base rate still being at 0.5 percent, there are a growing number of more enticing interest rates being offered by banks and finance firms as they look to draw in new customers. And shopping around for the best deal looks set to become increasingly important as the market for instant access savings accounts hots up and becomes ever more competitive.
