Interest rates have likely peaked – but half of savers still have no plans to switch accounts to bag a better savings deal.
Of those who have not yet moved to find a more generous rate, one in 10 say they are still waiting for rates to rise further, according to stockbroker Hargreaves Lansdown.
Just over a quarter of those staying put say it is because they’ve already got the best possible deal. Only one in six savers plan to move in the next three months.
Inertia is another part of the problem, with one in 10 not bothered to move their savings and a further 17 per cent of savers saying it is too much hassle to switch to an account with a better rate.
Time is ticking: One in ten savers say they haven’t moved savings accounts because they are waiting for rates to rise, but experts warn that savings rates may well have peaked
Sarah Coles, head of personal finance at Hargreaves Lansdown says: ‘Wait-and-see savers are refusing to make a move, despite the fact the market may well have peaked.
‘When we asked people why they were staying put, one in ten said they were waiting for rates to go higher. Unfortunately, it looks distinctly unlikely.’
We asked experts whether you should stick or twist with your savings account based on interest rates reaching their peak.
Is it worth waiting for better rates?
Even before the Bank of England decided to hold the base rate at 5.25 per cent in September, experts have been calling the top of the cycle for savings rates.
There are several warning signs that the savings market has peaked and that this is as good as rates will get for the forseeable future.
For example, last week NS&I pulled its best-selling 6.2 per cent one-year fixed-rate bond account, which sat at the the top best buy tables unbeaten for the five weeks that it was on sale.
The best easy-access account on the market is offered by Coventry Building Society and pays an interest rate of 5.2 per cent. The best one-year fixed rate bond is 6.12 per cent, available from Ahli United Bank via the platform Raisin UK.
Andrew Hagger, founder of personal finance website MoneyComms, says: ‘We have pretty much reached the peak as far as savings rates are concerned in the current cycle.
‘Simply put, not switching now could be costing you in two ways. Say you’re currently sitting on a one or two per cent easy-access rate – you’re already missing out on a possible three to four per cent extra on your rate every day you procrastinate.
‘Secondly, the rate you are switching to could be cut too in the coming weeks and months.
‘If the base rate is hiked by 0.25 per cent on 2 November, we may see an extra 0.1 per cent tweak on easy access rates from some providers but that’s by no means definite.
‘Trying to pick the exact top of the market is very difficult, but I feel we’re generally at that point now and wouldn’t delay my decision based on the hope that you could possibly get an extra 0.1 per cent.
‘On £20,000 this would only give you an extra £20 per year – so for most savers with smaller balances this is a negligible amount and not worth waiting for.’
Should you still switch if rates have peaked?
Sarah Coles does not believe that there will be a big or sudden drop in rates from levels seen now.
She says: ‘Rates should move down quite slowly, so some people should still move.
‘Those in a fixed rate deal coming to an end, who need to switch or will end up in an account paying a ropey rate, should try to move.
‘As should anyone in high street easy access account paying a pittance, who could make more in a competitive easy access account or with a fixed rate.
‘Anyone in any easy access account who definitely won’t need a chunk of the money for at least a year can capitalise on higher rates by fixing for the period that makes most sense for them should also still try to move.’
But there are some savers for whom it will not be as urgent to move savings accounts now.
Coles says: ‘If you’re in an easy access account with a high rate and you need the money to stay in easy access, you can afford to stay put.
‘The same goes for if you’re part of the way through a fixed rate deal as you usually can’t move in this case anyway.’
Savers looking for table topping rates should keep on their toes to make the best of good offers.
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Content source – www.soundhealthandlastingwealth.com