Savers’ common misconception could be costing them | European Markets

Many savers could unknowingly miss out on larger returns as a consequence of common misconceptions about the place their money is most secure. New analysis from Shawbrook discovered that a fifth (21%) of respondents admit refusing to put their financial savings in accounts with specialist or challenger banks as a result of they suppose their money is safer with a mainstream bank.

This might imply somebody saving £10,000 may lose as a lot as £255 a yr in curiosity by refusing to deposit their money in a specialist financial savings bank. The charges mainstream banks offer are sometimes significantly decrease than these of specialist banks.

Analysis by Moneyfactscompare in January discovered that the largest banks – akin to Barclays, NatWest, Lloyds, and Santander – have probably the most versatile easy accessibility accounts within the backside quartiles of the financial savings market.

Paul Went, managing director of Financial savings at Shawbrook Financial institution, mentioned: “Savers no longer have to settle for lower rates. While specialist banks might not have the same name recognition as some mainstream banks, they can be the best-kept secret for those looking to make their money work harder.”

With ISA season in full swing, savers who limit their options to familiar names risk earning less than they could, and choosing a higher rate doesn’t have to mean sacrificing security.

Any UK bank or building society signed up to the Financial Services Compensation Scheme (FSCS) protects deposits up to £85,000 per person per institution. This means savers benefit from the same level of protection whether they choose a well-known bank or a specialist provider.

With more than a third (35%) of respondents expressing no loyalty to any bank, there is a clear opportunity to grow their nest egg. One in three (34%) savers say that higher interest rates would be a key factor in prompting them to open a new account.

Mr Went added: “Inflation is increasing again, so every pound of interest earned matters.”

According to the Bank’s analysis of CACI data, 1.5 million ISA accounts maturing between February and the end of April. Mr Went said: “Now is the time to start looking at new accounts and using up any remaining ISA allowance.

“By broadening their search beyond the brands they already know, savers really can have their cake and eat it too.”

Rachel Springall, finance expert at Moneyfacts, said: “Loyalty doesn’t pay, which is why savers need to look past the largest manufacturers when evaluating financial savings charges. Commonly reviewing and switching pots is crucial when rates of interest change, significantly when base price cuts circulate into the financial savings market.”

She added: “There are a multitude of manufacturers lined by the Monetary Companies Compensation Scheme (FSCS), so it’s clever for savers to take some time to navigate the totally different choices on the market which may offer higher worth.”