People with savings accounts issued £624 alert | Personal Finance | Finance

Savers have been urged to act now to put their money in higher-paying savings accounts or risk losing out on “hundreds of pounds”. New calculations by Hargreaves Lansdown map out the losses people can face from holding back and “waiting” during the current climate, with some deposits losing as much as £624 in interest.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “The savings market is facing a push-me-pull-you of forces, with some savings rates edging higher in recent days, and others nudging down. The fact that there’s no clear direction for savings rates risks sparking a wave of wait-and-see savers. This could cost you hundreds of pounds.” However, she pointed out: “There are some signs that over time we can expect savings rates to fall.”

With growing geopolitical uncertainty, the finance expert pointed out that it’s “easy to see why some savers may be in wait-and-see mode”.

However, Ms Coles warned that this inertia could be costing you. She said: “Half of savers have no plans to switch their savings from their current home, which is still overwhelmingly in easy-access accounts with high street giants, where they’re often making less than half the best easy access rate on the market – and far less than a decent fixed rate.

“When we asked people why they were staying put, one in 10 said they were waiting for rates to go higher. This is, unfortunately, a fundamentally flawed approach. There are no guarantees that this will happen, but there’s a real cost to waiting.”

Sharing an example, Ms Coles suggested that if you have £30,000 in an easy access account earning 1.05% interest and leave it there for six months, you would earn £158 in interest over that period.

Suppose after those six months, the best fixed rate available rises from 4.5% to 5%. If you then fix your savings at this new rate for a year, after 18 months your total would be £31,700. If, instead, the best fixed rate falls to 4%, your total after 18 months would be £31,387.

Alternatively, if you fix your savings now at 4.5% for one year, you would have £31,378 after 12 months. If you then move your money into a competitive easy access account for six months, and easy access rates have dropped by half a percentage point (to 4%), you could end up with £32,011 after 18 months.

If, on the other hand, easy access rates rise by half a percentage point (to 5%), you might finish with £32,171 after the same period.

Ms Coles said: “It means that if rates fall in six months, by fixing now you might be £471 better off. If they rise in six months’ time, by fixing now you could actually be £624 better off. Whatever happens to rates, in these scenarios, you will always be better off fixing now at the best possible rate than hanging on in a dismal high street savings account.”

She added: “If you’re struggling to get round to switching, one option is a cash savings platform.

“You can open a single account, and then switch between different accounts from different banks in a handful of clicks. By removing the hassle, it can make it easier to take advantage of rates, and put an end to the endless process of waiting and seeing.”