Savers missing out on best interest rates as £28billion put in accounts with …

Savers are missing out on the recent wave of interest rate rises, according to new research from Paragon Bank.

The bank’s analysis of CACI data revealed that almost one in six new fixed and instant access adult savings accounts opened in the 12 months to August 2023 had a rate of 1.5 percent or less.

This suggests that savers are failing to shop around for the best deals which are on offer from many high street banks and building societies.

Some £28billion was placed in newly opened adult fixed and instant access accounts earning 1.5 percent or below.

Furthermore, around £26.5billion of that amount has been placed into instant access variants.

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In comparison, 3.9 million savings accounts were opened with rates paying above four percent.

Of those products, around 2.8 million were for fixed-rate deals, with £82billion deposited.

Increases to interest rates have been implemented by banks following recent actions by the Bank of England.

The central bank has hiked the country’s base rate in a bid to mitigate the impact of soaring inflation on the economy.

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As it stands, the base rate is at 5.25 percent which has been partially passed onto bank customers.

Some financial institutions are even offering more than the Bank of England’s base rate but these deals are likely to go away if the rate drops.

Derek Sprawling, Paragon Bank’s savings director, encouraged the public to take advantage of the hiked savings interest rates while they still can.

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He explained: “Whilst it is encouraging that savers are opening new accounts, nearly one in six accounts are earning relatively low rates of interest given the competitive rate environment of the past 12 months.

“The mantra of shop around for the best deal still applies in a higher rate environment, perhaps even more so given the premium some providers are offering on rates.”

The savings expert added: “However, we can also see the market is functioning.

!The doubling of new accounts opened compared to the 12 months before and the surge in balances deposited shows that many savers have responded to the more competitive rate environment.”

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