This one small swap could make you hundreds of pounds better off

Savers are being urged to check their savings accounts and ensure the interest rate on them is giving them a fair deal, with new research suggesting they may be hundreds of pounds better off with building societies rather than banks.

A period of higher-than-usual interest rates is making it a tricky time for mortgage holders and businesses, but for those with cash sitting idle it’s a moment of strong possibility, with a huge number of savings accounts offering between 4-5 per cent interest – comfortably above the rate of inflation, which sits at 3.1 per cent.

While inflation erodes the buying power of money over time, earning a higher rate of interest can help it grow in real terms instead – particularly noteworthy when considering there are hundreds of billions of pounds currently earning no interest at all after being left in current accounts.

Additionally, research by Skipton suggests close to £86bn is presently held in instant-access ISAs which were opened before 2020, which are paying an average rate of just 1.94 per cent.

And for UK Savings Week, finance comparison site Moneyfactscompare.co.uk is highlighting the difference that moving cash could make to individual savers. According to Moneyfacts, the average easy access savings account with a big high street bank offers a rate of just 1.16 per cent, compared to top rate building societies averaging 4.22 per cent.

On a £10,000 savings balance, that equates to £422 interest instead of just £116, a difference of more than £300 a year for savers.

Caitlyn Eastell, personal finance analyst at Moneyfacts, said: “Savers could be missing out on hundreds of pounds simply by leaving their cash in a lower-paying account. UK Savings Week is a great opportunity for savers to review where their money is held, because the difference between savings rates can have a significant impact on returns over time.

“In 2025, building societies paid savers an additional £2.1 billion in interest compared with the average rate offered by the largest banks, highlighting the important role they play in driving competition.

Get a free fractional share worth up to £100.
Capital at risk.

Terms and conditions apply.

Go to website

ADVERTISEMENT

Get a free fractional share worth up to £100.
Capital at risk.

Terms and conditions apply.

Go to website

ADVERTISEMENT

“Savers who remain loyal to uncompetitive accounts risk seeing the real value of their cash eroded over time. At a time when households are under pressure, improving savings outcomes is not always about putting more money away each month.

“To avoid missing out, savers should compare rates regularly across the whole of market, and switch to a more competitive deal if they find their hard-earned cash isn’t being rewarded.”

However, the subject of highest-paying savings accounts is more nuanced with a wider picture, while rates of course change frequently between competitors.

For example, regular saver accounts - where the saver often puts a set, smaller amount away each month with the goal of building up a cash pot over a year or so - currently pay 8 per cent with high street bank Santander and 7 per cent with first direct and Co-op Bank. That is compared to the highest building society rates which are 7 per cent with Progressive, 6.5 per cent with Nationwide and 6.3 per cent with Hanley economic.

When it comes to easy access accounts, the options for savers are further widened by a cohort of financial services firms offering strong rates in competition with each other, particularly on the cash ISA scene.

Cahoot and Spring both offer 5 per cent easy access accounts, though both are limited in terms of having a maximum amount of cash users can earn interest on.

The ongoing message, though, remains to ensure your cash is earning a competitive rate well above inflation - and that whenever possible, savers are adding to their pile to build financial resilience.