UK savers could be missing out on millions in lost interest

UK savers may be missing out on many millions of pounds in interest payments by opting for instant access saving accounts according to a recent study.

Figures compiled by First Direct suggest that UK savers may be losing up to £551million in interest by opting for instant access savings accounts instead of fixed rate savings products.

Though the the figure is £86million less than in 2010, this may be mainly as a result of low fixed interest rates and a marginal rise in interest rates on instant access accounts.

The figure of £551million represents an average of £57.14 interest lost per saver who has opted for an instant access savings account.

While instant access savings accounts may be the best option for savers who need to keep their capital within easy reach, many could benefit by shopping around to find the best option and rate to suit their needs. Head of Savings at First Direct, Bruno Genovese, said:

"While historically, the benefits of fixing your savings has been clear cut, in the current interest rate environment the distinction is less obvious. With inflation falling, and continued economic uncertainty, many savers will be tempted to try to ride out the storm and maintain flexibility with their money.

"When choosing whether to fix or have easy access to their savings, people need to be clear on what they are saving for. If it is more of a rainy day fund for use in case of unexpected events or emergencies, instant access savings are the best idea."

However, if the main reason for saving is a particular goal such as a housing deposit or a new car, fixing your savings may be the better option. Of course most people will be saving for a mix of reasons, and so would be best advised to have some money that can be easily accessed and some that is squirreled away, earning more interest."