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Defaqto claims savers could earn 298 times more interest

Research from Defaqto has found that the average instant/easy access savings rate is now at its highest level because banks and building societies are battling to attract new retail funds.

However, its emphasis was on the word ‘new’, because it claims many longstanding savings accounts offer unimpressive rates. The independent financial research provider claims 22% of easy access accounts pay interest of 0.10% or less on a balance of £1,000.

The study showed that a basic rate taxpaying saver who deposited £1,000 into an instant/easy access savings account in May 2009, and left the interest reinvested, would, after three years, have earned net interest of £71.73 if they had opened the account with the highest interest rate in May 2009, stayed with it for a year, then transferred to the account with the highest interest rate in May 2010, stayed with it for a year, then transferred to the account with the highest interest rate in May 2011 and stayed with it for a year.

This compares to just £0.24 for those who stayed with the lowest-paying instant access savings account for the three-year period.

David Black, Defaqto’s banking specialist, said: “There are significant benefits in switching your account every year to take advantage of successive accounts offering introductory bonuses.

“By following this tactic over the last three years you would have earned over 298 times as much interest as the lowest paying account and over three times as much interest as the average interest rate paying account.

“With such a wide variance in the interest rates, savers should wake up and take advantage of the best offers available rather than paying the price for loyally staying with the same easy access savings account for years.”

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