Savers ‘Unaware Of Interest Rates’

Britons could be putting themselves under unnecessary financial strain, new statistics have suggested.

According to a study conducted by Sainsbury’s Bank, about half of those with savings accounts (49 per cent or 19 million consumers) are unaware of what rate of interest they are receiving on their investments. In addition, ten per cent of savers only claim to know the rates that some of their accounts provide. Meanwhile only 41 per cent of those with such accounts are stated to be aware of how much interest they are receiving. As a result, Sainsbury’s Bank suggested that up to 112 billion pounds could be lying in accounts in which savers do not know the rate of interest being paid, a figure which could well help them make payments on loans, utility bills and other demands on their spending.

The company also pointed to a study commissioned earlier this year which revealed that about 40 per cent of accounts on the market paid less than three per cent in interest. Consequently, consumers were urged to take the time to search for a savings product which pays a competitive rate of interest, as doing so could help them store more money away for the future, which may leave them in a more capable position to pay off home loans and credit cards in later life.

Commenting on the data, Peter Wood, head of savings for Sainsbury’s, said: “There is a real and worrying level of apathy amongst savers when it comes to checking that their money is earning a good rate of return. Savers should be looking to take advantage of some of the great rates available - there are at least 71 instant access and notice accounts all offering rates of six per cent or more.”

The study also revealed that whether a large or relatively small sum of money is being put away, it “does not always have a bearing on whether people will pay close attention to their rate”. Research from the financial services firm revealed that some 9.24 million people with savings of up to 2,000 pounds are unaware as to how much interest they are paying, while 429,000 consumers with more than 60,000 pounds put away are also oblivious to such rates.

Taking the time to search for a competitively-priced savings account could be particularly advisable following the series of interest rate rises actioned by the Bank of England’s monetary policy committee since August 2006. Following the five increases since last year the base rate currently stands at 5.75 per cent - and although such moves may well increase loan repayment costs for many borrowers, research released in IFA Promotion’s Savings Brake report suggests that consumers are taking advantage of the current peak to put money into savings accounts. The firm reveals that the amount of money saved between April and June was 10 billion pounds higher than that recorded during the same period last year.

However, those finding they are struggling to put money into savings accounts due to other financial commitments may discover opting for a low-rate loan as a means of debt consolidation can help them free up more disposable income.

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