Savings inertia costs even more as savings rates fall, hitting £1,238
- More than half of savers (52%) haven’t moved any of their savings in the past year.
- A third haven’t switched in the past five years (33%).
- Almost a quarter (23%) have never switched.
- Half of savers don’t ever plan to switch their savings (51%).
- The average high-street branch-based easy-access account available to anyone pays 1.2% on £20,000. The best option on the market (excluding those limited to small sums and those that restrict withdrawals) pays 4.55%.
- If you have £20,000 in an average branch-based high street easy access account, inertia is costing you £688* a year.
- The 20% highest-earning households in the UK hold an average of £37,665 in savings (HL Savings & Resilience Barometer). The difference between average rates from the high street giants and the best on the market would cost them £1,238 a year*.
- The cost of savings inertia has risen over the past six months.
Figures from a survey of 2,000 people by Opinium for Hargreaves Lansdown, April 2025
Sarah Coles, head of personal finance, Hargreaves Lansdown
“Falling savings rates have raised the cost of inertia. When rates are dropping, it can put people off switching, so half of them haven’t bothered moving any of their money in the past year. However, the high street banks have been slashing rates far faster than online banks and savings platforms. The cost of savings inertia is climbing.
The high streets have been far quicker to cut rates than the most competitive on the market, so the gap has opened significantly. The most competitive offering is 4.55% on easy-access savings, while the average high street offering is just 1.2% on £20,000 of savings.
Six months ago, saving £20,000 in the most competitive account had the potential to earn £674 more in interest per year than the average high street bank. Bank rate cuts in the interim have widened this difference to £688. A number of the high streets offer tiered rates, so you make more when you hold more in them. However, even taking these into account, the most competitive on the market will pay £1,238 more than the average high street account, up from £1,222 six months earlier. These aren’t enormous shifts, but the gap is widening at a time when you might assume it would be narrowing (which is what usually happens when rates fall).
Inertia
UK savers have always been fairly sticky. Over the last few years, savings rates have fluctuated, so it’s surprising that throughout this period, a third of people haven’t moved their savings at all. The whole notion of switching is off the table for millions of people. Almost a quarter of savers have never switched their saving,s and half don’t have any plans to switch at any point in the future.
Falling rates also make a switch less likely. At times of falling rates, we’re less likely to switch because we can’t see the hope of a great rate elsewhere, and we’re less excited about minimising the damage than we were about making the most of rises. People worry that rates might fall again after they’ve moved, or that lower rates aren’t worth the effort involved.
Yet this is the time when switching accounts can be particularly rewarding. If you were already with a high street giant that offered less to begin with and is now cutting rates, the difference between the best rates on the market and a typical high street offering is stark, and there are hundreds of pounds a year to be saved by making the switch.
How to make your savings work harder
The process begins by determining what your savings are for. Don’t think of it as one significant lump sum; break it down according to when you need the money. Then you can build a savings portfolio with each chunk fixed for the period that makes the most sense for you.
You need emergency savings. When you’re working age, you need cash to cover 3-6 months’ worth of essential spending in an easy access savings account or cash ISA, and when you have retired, you should be able to cover 1-3 years’ worth.
You also need to consider lump sums you’ll need at specific times over the next 5 years, for everything from big holidays to home improvements. Lock up each chunk of cash for the period that makes most sense in a fixed-rate savings account if you’re saving for 5-10 years or more. You should at least consider investing some of it in a stocks and shares ISA. Although investments will rise and fall in the short term, over the longer term, they tend to produce more growth than cash.
You will need to shop around for the best possible interest rate over these periods, and the most competitive deals tend to be available from online banks and cash savings platforms. You also need to be honest with yourself when choosing a new account. Some people will be able to manage a portfolio of accounts with different banks and have the energy to shop around and open new accounts when existing ones expire. Others start with good intentions but get overwhelmed. If there’s a chance that’s you, consider consolidating your savings onto a savings platform to make it easier to keep an eye on everything in one place and switch.”
*Return in the average easy access branch-based savings account, assuming a balance of £20,000 averages 1.2%
Based on Barclays, Lloyds, HSBC, NatWest, Nationwide, Santander, Halifax, Bank of Scotland, Royal Bank of Scotland, TSB (3 June 2025)
Current best easy access rate available to those with £20,000: 4.55%
**Return in the average easy access branch-based savings account, assuming a balance of £37,665 averages 1.35%
Based on Barclays, Lloyds, HSBC, NatWest, Nationwide, Santander, Halifax, Bank of Scotland, Royal Bank of Scotland, TSB (4 November 2024)
Current best easy access rate available to those with £37,665: 4.55%
