Young people are likely to stick with the same savings account for four years – longer than they stay in a typical job, according to new research.
Those under the age of 35 tend to change employers every two-and-a-half-years, according to data from Smart Money People – meaning they are more loyal to their bank than their work.
That is despite being able to earn more interest if they switched their account to another provider.
The research said that those aged between 18 and 34 have squirrelled away an average of £6,375 each in their savings, but that 50 per cent don’t even know their current savings interest rate.
Savings rates: The best available push beyond 5%, while some banks offer less than half of that
Savers could nab themselves as much as £325 extra in interest on their £6,375 savings if they moved their money into another easy access savings account, according to Be Clever With Your Cash, sister site to Smart Money People.
Despite not knowing the specifics of their rate, as many as 66 per cent of young savers are thinking about jumping ship over the next six months as interest rates look likely to fall.
Currently, the best easy access savings account, offered by Paragon, will give 5.0 per cent interest, with 4.9 per cent offered by Aldermore, 4.85 per cent offered by Leeds Building Society and 4.85 per cent offered by Chip.
Meanwhile, an easy access cash Isa will see you earn 5.17 per cent with Plum, as part of a bonus for your first 12 months, 5.16 per cent with Moneybox under a similar bonus scheme and 5.1 per cent with Chip, whose rate will not drop off after 12 months.
> Find the top savings rates using our independent best-buy tables
Bigger banks, however, offer much lower savings rates, with just 1.66 per cent available on Barclay’s Everyday Saver account for example.
It seems, however, that savings rates aren’t at the top of many people’s list of priorities.
One such case is 24-year-old Eleanor Heath, who has saved up £9,300 in an easy access savings account that she has held for the past four years.
‘I have looked at switching to a fixed term savings account to gain higher interest but for the purpose of these savings I require instant access which higher interest accounts do not always offer,’ Eleanor told This is Money.
With little money to put aside in long-term investments, younger people often favour accounts that can provide them with access to their money when they need it.
Easy access: Eleanor says her savings account is right for her because it gives instant access to her cash
‘This savings account is for general use and booking holidays,’ She said. ‘I like the account as I can transfer in and out of the account at any time, it is app based so I can easily transfer between accounts and see my running balance.’
Eleanor, however, said she is planning on moving to a new bank at some point within the next year, ‘I’m not currently in a rush to switch this savings account,’ she said.
She said: ‘I have stuck with the account purely because I do not have the time to go through endless questions to open a new account, it’s not on the top of my list at the moment. But when my savings increase I will definitely switch to gain more interest.’
Now or never: Andy Webb says savers need to act to secure fixed rate
On her current £9,300, a 1.65 per cent rate would earn Eleanor £154.62 over the course of a year. In comparison, 12 months of Plum’s bonus account at 5.17 per cent would leave her with £492.37 in interest, or £485.55 on Chip’s 5.1 per cent rate.
Andy Webb, money expert at Be Clever With Your Cash, said: ‘The top reason why younger savers have remained loyal to their banks is a fear of the moving process. They are the age group who find changing financial products the most stressful.
As is the case with Eleanor, Webb said: ‘A third of this age group have been using their savings to help pay for their daily living expenses, suggesting they haven’t wanted to transfer their pots because they want immediate access to the money.’
Choosing to stay put isn’t something that is confined to the young, however, with 24 per cent of savers not thinking that it is worth the effort to shift their funds, while another 17 per cent said there area too many savings account options and they don’t know what to do.
Even so, almost half don’t feel that they are being rewarded for their loyalty to their savings provider, which could be bleeding into the growing proportion who are seeking greener pastures.
Whilst the hassle of switching provider can put people off, a massive 88 per cent of savers are now looking to change providers over the coming six months in order to find a better interest rate.
Smart Money People chief executive Jacqueline Dewey said: ‘Savers are voting with their feet by moving their existing savings pots to new providers this spring. Customers looking to transfer their money should also consider factors such as customer service, accessibility, and the tech the provider has.’
Webb added: ‘Savers need to act now to take advantage of the best deals on the market. But these rates won’t stay around forever.
‘If you’re earning very little right now then it’s well worth moving your money to get the top rates, just bear in mind variable rates can, and likely will, fall this year. So locking in with a fixed rate will guarantee the higher rates for the duration.’
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