Savers with high street banks like Barclays, HSBC and Lloyds could be almost £300 worse off
Savers with high street banks such as Barclays, HSBC and Lloyds are being cautioned that they could be nearly £300 a year worse off by not doing this. Staying loyal to well-known brands means accepting rates barely above 1% – while lesser-known challenger banks offer more than 4%, according to analysis from Moneyfactscompare.co.uk.
On average, the largest banks provide just 1.19% on flexible easy access accounts, down from 1.37% last year. In contrast, the leading challenger banks offer an average of 4.12%.
For a saver with £10,000 in the bank, this disparity equates to a significant difference: £119 a year in interest with a typical big bank account versus £412 with a typical challenger bank – a difference of £293.
Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, said: “Loyalty to big banks can leave savers hundreds of pounds worse off, an amount that many may struggle to spare.”
With savings rates expected to drop further from the peaks seen over the past few years, staying in a low-paying account may amplify the cost, making it harder for savers to reach their financial goals.
“Someone with £10,000 in a typical big bank easy-access account could earn just £119 in a year, compared to the £412 in a typical top challenger bank easy-access account. The incentive to switch quickly becomes clear, but even small differences in interest rates can make a big impact over time.”
She emphasised that savers aren’t required to take on additional risk by moving away from the major high street banks.
“Savers don’t have to take on additional risk by switching to a smaller or digital provider because many challenger banks are also covered by the Financial Services Compensation Scheme (FSCS), which protects deposits up to £120,000,” she explained.
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However, she cautioned that many attractive offers include temporary bonus rates that can later vanish.
“Challenger banks often lead the market with headline rates that include limited-time bonuses, sometimes exceeding 2%.”
Bonus rates reward active switchers, allowing them to access the best rates and boosted returns in the short-term, but they also drive competition between providers, pushing banks to offer better deals all round.
“Once bonuses expire, rates can fall sharply, so passive savers risk being left behind, and those seeking stability may find these less suitable for long-term planning.”
Philly Ponniah, chartered wealth manager and financial coach at Philly Financial, said: “Big banks are relying on inertia, full stop.
“Paying 1.19% when challengers average over 4% is a huge loyalty penalty. In a year where rates are drifting down, staying put will cost you. Easy access should still work hard, and switching takes minutes online. The key point is that you do not need to take extra risk to earn more.”
She added: “As long as the bank is FSCS-protected, your money has the same safety net up to the limit. But savers need to stay alert as many top rates include short-term bonuses. When those end, the rate can reduce fast.
“The winners are active savers who review their accounts at least once a year and move if needed.”
Samuel Mather-Holgate, managing director at Mather and Murray Financial, told Newspage: “With rates likely headed south based on last week’s murmurings from the Bank of England, savers need to bring their A-game in 2026. Be active, search around for the best deals and do not feel you need to be loyal to your bank just because you have been with them all your life.”
Big banks’ easy access selection*
Provider
Account
Gross rate at £10k
Barclays Bank
Everyday Saver
1.05%
HSBC
Flexible Saver
1.14%
Lloyds Bank
Easy Saver
0.75%
NatWest
Flexible Saver
1.00%
Santander
Easy Access Saver
2.00%***
Deals available to new customers and includes accounts that allow multiple withdrawals without penalty. ***Reverts into Everyday Saver after 12 months. Based on a £10,000 deposit, gross rates. Data correct as at 9.2.26 Source: Moneyfacts
Challenger banks’ easy access selection**
Provider
Account
Gross rate at £10k
Bonus rates
Charter Savings Bank
Easy Access – Issue 70
4.06%
None
Chase
Chase Saver With Boosted Rate
4.41%
2.23% bonus for 12 months
Kent Reliance
Easy Access Savings Account – Issue 13
4.07%
None
Shawbrook Bank
Bonus Easy Access Savings Account – Issue 5
4.05%
Includes 1.98% bonus for 12 months
Spring
Easy Saver
4.03%
None
Deals available to new customers and includes accounts that allow multiple withdrawals without penalty. Based on a £10,000 deposit, gross rates. Data correct as at 9.2.26 Source: Moneyfacts
