Savers urged to ditch 1% accounts as big banks lag rival rates

Savers are being urged to move their money away from the big three UK banks’ easy-access savings accounts, which pay about 1% interest and fail to keep pace with inflation. The warning comes after a roundup of rates and options from independent savings experts, who say customers can earn substantially more by switching to non-bank providers or building societies.

The three accounts singled out are Halifax Instant Saver, Santander Everyday Saver and Lloyds Easy Saver. Each pays around 1% on balance, a level that critics say erodes purchasing power as prices rise. The parcels of money tied to these accounts can be moved using faster payments, often within two hours, making a switch feasible in a short timeframe. The guidance emphasizes that many savers may have ended up in these accounts after promotional bonuses expired, leaving them stuck in low yields without realizing it.

Experts note that the problem extends beyond the specific Halifax, Santander and Lloyds products. Other major banks, such as NatWest and Barclays, offer similarly low rates on their basic savings accounts, while HSBC’s Flexible Saver among the best-performing big-bank options still comes in around 1.15%. Market watchers say the rates could worsen if the Bank of England moves to trim the base rate, which had been at 4% and could fall toward 3.75% in upcoming decisions. If the base rate drops, the gap between high-street offers and inflation could widen further, prompting more savers to consider switching.

In the meantime, industry observers point to substantial sums parked in current accounts, with some estimates suggesting hundreds of billions of pounds earning little to nothing on savings rates. Moving money between accounts is presented as a straightforward step: open a new account with a higher rate, link it to the existing current account, and transfer funds to secure better returns. The process is said to take around 10 minutes, and many savers could see their earnings rise by several percentage points.

Beyond the big banks, several providers are offering far more attractive rates, though often with terms or limits that require attention. Paragon Bank’s app-based Spring account is among the top payers at about 4.11%, though the rate may fall if market conditions change. Cahoot, the Santander online arm, offers a Simple Saver rate near 4.4%, but it lasts for 12 months before funds are moved to a different Cahoot Savings product that pays around 1% thereafter. Building societies also present compelling options: Skipton’s Bonus Saver offers around 4%, while Family Building Society’s Market Tracker advertises roughly 4.14% with a rate set to adjust quarterly and projected to slip to about 3.98% next month.

Other high-rate contenders include Kent Reliance at about 4.51%, with Chetwood and GB Bank close behind around 4.4%. For cash ISAs, Charter Savings Bank’s one-year fix sits atop the field at about 4.3%, joining Tembo and Investec in similar ranges. These products are typically easy to access online, but many carry caveats such as a finite term, the need to switch after a year, or restrictions on joint accounts.

As consumers weigh options, a notable constraint among building societies is the limitation on joint ownership for regular easy-access accounts; cash ISAs in particular may not be opened jointly. This can affect households saving together for weddings, holidays, or emergencies. A diary of renewals is often advised, given that many top rates are promotional and can vanish quickly once the introductory period ends.

Overall, market observers say savers should act promptly to lock in the best available rates. While the base rate outlook remains uncertain, the incentive to switch is clear: the potential return from top accounts can be several times higher than the big-bank offerings, even after considering any new promotional terms. In a fast-moving market, delaying could mean missing out on the strongest available deals as lenders adjust rates to reflect evolving monetary conditions.