You could be missing out on hundreds of pounds annually (Image: Getty)
Millions of Britons are throwing away cash every single day by remaining faithful to bank accounts that offer virtually nothing in return. Over the course of a year — this amount compounds and can result in missing out on significant savings which could otherwise be added to your pot.
While your current account languishes there earning pennies, superior alternatives could be putting hundreds of pounds back into your pocket annually. Luckily, a personal finance expert has shared tips on how to make your money work for you.
“Most people don’t realise how much their financial loyalty is costing them,” explains Fred Harrington, personal finance expert at Vetted Prop Firms — a platform that specialises in financial market analysis and trading strategies. “The difference between a basic account and a smart account setup can easily mean upwards of £1,000 extra per year — and that’s without changing a single spending habit.
“The biggest mistake people make is thinking they need to change their financial habits dramatically to see real benefits. The truth is, the most powerful wealth-building moves are often the simplest ones — like ensuring your money works as hard as you do.”
With interest rates remaining elevated, banks persist in offering substantially superior deals to fresh customers compared to existing ones. Fred breaks down precisely how much cash people are forfeiting — and what they can do about it.
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The figures don’t lie — here’s what you’re forfeiting
The contrast between shrewd and complacent banking is eye-watering.
Consider someone with £10,000 in savings languishing in a standard current account earning 0.1% interest – that’s a paltry £10 per year. Transfer that identical sum to a leading easy access savings account at 4.5%, and you’re examining £450 annually.
That’s a £440 difference for literally doing nothing except relocating your money. But savings represent only half the equation. They’re not the only area you could be generating income from — in fact, your daily expenditure can add to the pot too.
While a standard debit card offers no returns on purchases, cashback debit cards can deliver 1-3% on routine spending. For someone spending £1,000 monthly (£12,000 annually), that’s potentially £360 back in your pocket each year.
Fred says: “When you combine better savings rates with cashback on spending, we’re talking about £800+ extra per year for the average person. For households with larger savings pots or higher spending, it can easily reach £1,600 or more annually.”
Consider opting for a cashback debit card instead of a standard one (Image: Getty)
Why people remain trapped in financial ruts
Despite these obvious advantages, research reveals half of Brits have never switched their savings provider. So what’s preventing people from making the move?
Individuals often remain with their childhood bank through force of habit. Banks recognise this and can reserve their poorest rates for existing customers, knowing they won’t depart. More than 6 in 10 UK adults believe switching requires too much hassle, when in reality, most switches can be completed online in under 15 minutes, with automatic account transfers managing the complex work.
People also tend to fret about hidden charges, minimum balances, or losing access to their funds. Fred highlights this anxiety often costs more than any potential drawback.
The personal finance expert explains: “Banks rely on customer inertia. They’ll offer new customers 4%+ rates while giving loyal customers 0.1%. It’s a loyalty penalty that costs people hundreds of pounds yearly.”
You can make your money work for you by making some simple changes (Image: Getty)
Which account is the best for you
Not all high-interest accounts are created equal — here’s how you can spot the real deals:
1. Scrutinise the fine print on rates: “High interest” accounts may only offer attractive rates for the first £1,000 or impose stringent monthly conditions. Seek out accounts that offer competitive rates on larger balances and have minimal requirements.
2. Examine the cashback categories: Some cashback cards are only valid at certain retailers or limit your earnings to £10 per month. The top cards provide unlimited cashback on all purchases or wide-ranging categories such as groceries and petrol.
3. Be wary of hidden charges: A 4% savings rate is meaningless if there’s a £5 monthly fee. Always determine the net gain after considering any fees, minimum balance stipulations, or withdrawal limitations.
Fred advises: “The golden rule is simple arithmetic. Work out your total annual benefit minus any fees or requirements. If it’s significantly more than your current setup, make the switch.”
The expert further remarks: “I always tell people to automate everything once they’ve found the right accounts. Set up a standing order to move money into your high-interest savings account the day after payday. Use your cashback debit card for all everyday spending, then immediately transfer that money to savings too. This way, you’re earning on both ends without thinking about it.
“The compound effect is incredible. That extra £800-1,600 per year, when consistently saved and earning interest, turns into serious money over time. People often ask me about complex investment strategies, but honestly, fixing your basic banking setup delivers guaranteed returns with zero risk. It’s the foundation everything else builds on.”
