A stark warning has been issued to millions of UK savers, revealing that loyalty to well-known high street banks could be costing them hundreds of pounds in lost interest each year.
Matthew Jenkin, a consumer expert from Which?, has urged account holders to look beyond familiar names like Barclays, NatWest, Nationwide, and Santander if they want their money to work harder in 2026.
The High Street Savings Trap
Jenkin identified one of the biggest mistakes savers make is limiting their search to the high street. While the familiarity of a household name can feel safe, he argues that venturing outside this comfort zone to consider smaller or online providers can lead to significantly better returns.
He provided a clear example of the potential cost. On a £10,000 savings pot, the difference between the average high street rate and the best available could be substantial.
"If you invested £10,000 in a high street account paying 1.15% AER, you could expect to earn £115 in interest over a year," Jenkin explained. "But if that balance was invested in the top account for larger deposits you'd earn 4.48% AER and your annual interest income would increase to £448."
That represents a loss of £333 over a 12-month period for those who do not shop around.
How to Save Safely and Smartly
For those nervous about moving money to a lesser-known bank, Jenkin emphasised the importance of ensuring any new provider is covered by the Financial Services Compensation Scheme (FSCS). This government-backed protection safeguards up to £120,000 per person should the institution fail.
He also warned that not all newer 'challenger' banks are automatically FSCS-protected, so checks are vital. As of January 2026, some of the top rates for easy-access accounts are offered by online-only providers like Chase and Cahoot.
Jenkin highlighted other common pitfalls savers must avoid:
- Inertia on fixed accounts: When a fixed-term bond matures, banks may automatically move your cash into a lower-paying account unless instructed otherwise.
- Expiring bonuses: Some attractive headline rates include temporary bonuses. Savers should note when these end and be ready to switch.
- Platform fees: Some savings platforms charge fees, which can be deducted from your interest or balance.
Advanced Strategies for Your Savings
To manage savings more effectively, Jenkin suggested considering a savings platform that allows you to open and switch between multiple accounts with a single login, often providing exclusive deals and rate alerts.
For those with larger sums, a 'split and save' strategy can be useful. This involves keeping some funds in an easy-access account for flexibility, while spreading the rest across several fixed-rate accounts with different maturity dates.
Locking money into longer-term fixed rates is another option, with some banks now offering terms of up to seven years. However, Jenkin cautioned that while rates are currently falling, committing for such a long period requires careful thought as the economic landscape can shift.
Finally, he warned savers to be mindful of unnecessary tax on their interest. The Personal Savings Allowance allows basic-rate taxpayers to earn up to £1,000 in interest tax-free, and higher-rate taxpayers £500.
For those with significant sums, a cash ISA remains a key tool for shielding savings from tax, currently allowing up to £20,000 per year to be protected. It is important to note that from 2027, the amount you can hold in cash for those under 65 will fall to £12,000.
Jenkin's core message is clear: in a dynamic savings market, active management of your money is essential to avoid missing out on substantial returns.
