It pays to keep an eye on your money and with the cost of living crisis eating into savings, financial guru Martin Lewis is urging particular vigilance. He has now issued an urgent warning to everyone with money in a savings account.
Martin says check how much interest those accounts are making, warning that if the rate is under 2.5% then you need to act now to boost it. He said that is the very lowest rate anyone should be earning on any savings amount following the Bank of England’s recent base rate hike to 3%.
During the latest edition of The Martin Lewis Podcast on BBC Radio 5live, Nottinghamshire Live sister publication, Daily Record, noted that the consumer champion was explaining a “savings rip-off”. On the programme, he said that with inflation currently running at over 10%, most savings aren’t savings, they are in fact “losings” because the interest you’re earning - even in top savings accounts - is far less than inflation.
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Explaining co-presenter, BBC Radio 5live’s Nihal Arthanayake: “Most people who have got savings are earning less than 1%, the average easy-access savings account is paying just 0.75%. I want to show you how to stop the savings rip-off and it is indeed a rip-off for most, you should not be earning anything less than 2.5% on your savings that is my absolute, complete bottom-out on the savings rate you should be getting.
“With inflation running at over 10% at the moment, most savings aren’t savings, they are in fact ‘losings’ because in real-terms the interest you’re earning even in the top accounts is far less than inflation.
“Now that isn’t a reason not to get the best savings interest rates, in fact, I would say it should put more of a fire up your backside because the more you earn in savings, the more you mitigate the damage of inflation on the cash that you have worked hard to store up over the years.”
During the Podcast, Nihal Arthanayake checked his own savings rate and was flabbergasted to discover that it was only 0.5%, calling it a “liberty” being taking by his bank.
Martin said: “Let Nihal’s lackadaisical attitude to money be a lesson to all of you listening. The vast majority of you have savings paying virtually nothing, everybody listening unless you’ve done this exercise in the last few weeks need to check now what interest you are earning on your savings. In almost all cases, unless you’re in a fix, to change savings you just withdraw the money and you put it in a new account.”
Although he warned it’s not as simple if it’s a cash ISA as you need to transfer it or you will lose the cash ISA status. He also advised anyone with expensive debt to clear that first before opening a savings account.
Martin also listed some of the best easy access deals offering 5% but as these rates can change quickly the best place to find them is on the dedicated section of MoneySavingExpert.com - the consumer website he founded - which is updated daily.
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