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3 things that could stop you from reaching your savings goals in 2022

We’re looking at where savers go wrong when it comes to setting their new year financial resolutions.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

It’s the first week of January. If you’ve set your resolutions for the new year, all that’s left to do is keep them.

New Year resolutions, like sorting out finances and cutting back on spending was one of the most popular in the UK, alongside eating better and getting fitter.

But there’s one important goal you shouldn’t miss out on - getting better rates for your savings.

With the Bank of England’s interest rate rise a few weeks ago, savers were looking forward to high street banks following suit. But while big banks have hiked up their mortgage rates, savings rates are still rock bottom.

We look at the three things that could possibly prevent 2022 being your best year yet for your savings.

This article provides helpful tips but isn’t personal advice. If you’re not sure if something is right for you, we recommend speaking to a financial adviser.

Mistake #1 Staying loyal to your bank

We all need to have quick access to cash for emergencies and the unexpected. But, keeping it all in instant or easy access accounts with your main bank could be costing you more than you think.

Half of the savers we surveyed last year said they keep their savings in an Easy Access account with their bank*.

So, we looked across the market to see how much the big banks are currently offering. And the results were startling.

The average return for savers is 0.01% AER/Gross across major high street banks. That means savers are losing even more money, thanks to the increased cost of living and inflation.

AER (Annual Equivalent Rate) - Shows what the interest rate/expected profit rate would be if it was paid and compounded once each year. It helps you compare the rates on different savings products.

Gross - The interest rate without any tax removed. Interest/profits are paid gross. You are responsible for paying any tax due on interest/profits that exceed your Personal Savings Allowance to HM Revenue & Customs. Tax treatment can change.

Fixed term products pay a fixed rate. Easy access and limited access products pay a variable rate.

Read more about the inflation risk to your cash savings

If big banks are putting out some of the lowest rates across the market, it’s hard to imagine savers are getting the best rates for their money.

There’s a lot to be said for convenience and trust but keeping all of your money with your bank is riskier than you might think.

In 2001 the Financial Services Compensation Scheme was implemented. It gives confidence that savers are protected up to £85,000 per banking license if their bank goes into default.

But savers often mistake the meaning of banking license.

For example, if you have a current account, an easy access account and a fixed term account with the same bank, you’re only covered up to £85,000 across all those accounts.

Getting better interest rates on cash savings and mixing and matching across a variety of banks and building societies can help to not only spread risk but potentially earn you more interest while still being covered by the FSCS protection.


Mistake #2 Waiting too long for rates to rise

When the Bank of England hiked up interest rates at the end of last year to keep a cap on inflation soaring, lots of savers thought their banks would follow in the BoE’s footsteps. But they haven’t, and we believe the chances are they won’t.

It could be tempting to hold back in the hopes rates will rise further in the future due to a knock-on effect.

But rate rises aren’t predictable, and the savings market can fluctuate.

This is particularly true for high street banks who don’t need to compete for your cash savings. So, they typically offer a lower rate. We might think of them as easier and more convenient, but you have to wonder, is convenience more important than earning more interest?

Smaller banks who need to compete harder for your cash usually offer higher, more competitive rates. Like the other larger high street banks, they’re normally still covered by the FSCS protection but you need to make sure they’re right for your circumstances.

By waiting for rates to rise, you might find yourself in a bit of a negative loop. If they suddenly fall or don’t rise to what you’d hoped for, you could hold back again.

Read more on interest rate rises and savings

Having a good cash savings strategy is one solution to this problem.

By treating your cash savings like a savings portfolio, you can mix and match across terms and rates that could get you earning more interest than you thought. Have a clear plan about when you’d need to access your savings, and whether you could get a better deal by locking your cash away for longer.

See what a savings portfolio could look like

Mistake #3 Not exploring fixed rates

There can be a conundrum savers face when trying to get the best rate for their savings goals.

To fix or not to fix?

Fixed term savings rates are usually much higher than those offered by easy or instant access. It helps banks and building societies keep track of exactly what’s coming in and out.

But savers are sometimes hesitant to lock their money away for longer periods of time.

There’s a worry too that if you fix and the rates rise, you won’t be getting the best on the market.

But there’s no guarantee rates will stay the same. Jumping on them when they’re the best on offer means if they fall, you’d have fixed at the right time. The opposite is also true – you could lose out if rates rise further in the future, as fixed term products generally only allow access to funds at maturity.

Similarly, you don’t have to put all your savings into fixed rates at once. You could stagger your savings in a timeline that fits you, or you could save in a mix of fixed accounts that have varied terms.

We always suggest having 3-6 months of essential expenditure in an easy access account, or 1-3 years’ worth if you’re not working or retired. But the rest of your savings could be earning you more interest.

Don’t just settle when it comes to your savings. Although ease and convenience is appealing, you won’t be getting the most out of your cash.

And getting the right rates for your cash, isn’t as hard as it seems.

You can access competitive rates and terms on the market through Active Savings, all in one simple online account. Once you’re set up, you don’t need to fill out endless paperwork for each bank or building society you decide to save with. And you can even see your savings and investments alongside each other.


* HL survey conducted by Opinium September 2021, 1,396 respondents.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.

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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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