ITV money man Martin Lewis is urging all UK residents who have invested in a savings account to check their interest rates - warning that if yours is under 2.5 per cent, you should act now too give it a boost.
The financial expert has also revealed that this is the minimum rate than anyone should be earning on their savings, regardless of the account type or amount, leading on from the Bank of England's recent base rate hike to 3 per cent.
In his latest edition of The Martin Lewis Podcast on BBC Radio 5 Live, Martin explained how there's a 'savings rip off' at present, and with inflation running riot over ten per cent, most savings aren't savings and are in fact 'losings'.
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The Daily Record reports that this is because the interest you’re earning - even in top savings accounts - is far less than inflation. Speaking to co-presenter Nihal Arthanayake: “Most people who have got savings are earning less than 1%, the average easy-access savings account is paying just 0.75%.”
He added: “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 podcasting session, Nihal went on to check up on his own savings rate and was astounded to discover that his rate was only 0.5 per cent - calling it a 'liberty'. Martin, responded: “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.
You can listen to the full Podcast on BBC Sounds here.
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