05 February 2024 , 14:08
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Savers are potentially missing out on up to £346 worth of interest a year by keeping their money in low paying accounts, new research shows.
Data from Atom bank shows some high street banks are still paying as little as 1.40% on their easy access accounts. In comparison, smaller building societies and challenger banks are paying over 5%.
The analysis comes as data from the Current Account Switch Service found that more people than ever switched current accounts between October and December 2023. The majority of these customers moved to high street banks that were offering hefty switching bonuses of up to £200 before Christmas.
These switch bonuses have all disappeared now - sparking calls for savers to use this opportunity to check their savings rate. When choosing a savings account, you should first make sure you are covered by the Financial Service Compensation Scheme (FSCS) which protects up to £85,000 of your money if a provider goes bust.
Savers with a fair chunk of money to put away should also keep in mind you can only earn a certain amount in interest each year before you start paying tax. The personal savings allowance is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, while additional rate taxpayers don't get an allowance at all.
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Additionally, you can put away £20,000 each year into an ISA account and any interest earned here is always tax-free. Atom has launched a new “get paid, not played” campaign, which is calling on high street banks to offer fairer rates on easy access saving products.
Mark Mullen, CEO at Atom bank, comments: “The lure of hefty bonuses to switch a current account clearly works, and people are right to take advantage of such offers. The truth remains however that once these banks have customers through the door, there is rarely a reward for their loyalty.
“Despite a campaign from the Treasury Select Committee and mounting media pressure to raise rates, these banks are still paying their savings customers below 2.00% on their easy access account. Now that these cash incentives have largely disappeared, I would implore anyone who has money sitting with one of the big banks to be savvy with their savings. They may be missing out on hundreds of pounds in interest, which when it comes to providers like Atom bank, may just be a few clicks away on your mobile phone.”