A stark financial warning has been issued to UK households, suggesting they could be missing out on more than £300 in annual interest by keeping their savings with a traditional high street bank.
The High Street Savings Gap
Matthew Jenkin, a consumer expert at Which?, has urged savers to look beyond familiar banking names in the new year. He stated that one of the biggest mistakes people make is limiting their search to the high street, where average rates are significantly lower.
Data from Moneyfacts shows the gap in rates is widest on instant-access products. High street providers have struggled to compete with smaller challenger banks for years, Jenkin explained.
The £300 Difference Explained
Jenkin provided a clear example of the potential loss. If you invested £10,000 in a typical high street instant-access account paying the average rate of 1.15% AER, you would earn just £115 in interest over a year.
However, if that same £10,000 was placed in the top-performing account for larger deposits, currently offering 4.48% AER, the annual interest would jump to £448. That represents a difference of £333 in lost interest income.
"Today's top instant-access and fixed-rate deals are almost exclusively offered by brands you might not be familiar with," Jenkin noted, emphasising the need for savers to broaden their horizons.
How to Save Safely with New Providers
For those nervous about moving their money to a lesser-known bank, Jenkin advised performing key checks to ensure funds are protected. The primary safeguard is the Financial Services Compensation Scheme (FSCS).
The FSCS protects up to £120,000 of a saver's money if the bank or platform fails. While challenger banks must follow the same regulations, not all are FSCS-protected, so it is crucial to verify this status before opening an account.
By breaking out of their comfort zone and conducting these simple checks, UK savers can significantly boost their returns in 2026, turning their post-Christmas financial planning into a more profitable endeavour.
