It's a good time for savers.
Savings rates have been rising as turmoil in the bond markets has pushed yields to multi-year highs. Movements in the bond market, particularly UK government bonds known as gilts, can have a significant impact on household finances.
While higher bond yields can be challenging for borrowers by increasing the cost of mortgages and other forms of debt, for savers the opposite may be true. As gilt yields rise, banks and building societies can often afford to offer better savings rates while also competing harder for customer deposits.
This article isn’t personal advice. If you’re not sure if an action is right for you, ask for advice.
Why savers could be missing out on hundreds of pounds a year
The latest rise in yields has been driven by concerns that inflation could remain stubbornly high as conflict in the Middle East pushes energy prices higher at a time when government borrowing remains elevated.
As a result, the average rate on a new savings account has climbed to 3.67%, according to Moneyfacts, the highest level since February 2025. Yet higher average rates do not automatically translate into better returns for everyone.
Savers who fail to review the interest they receive regularly could still be missing out on hundreds of pounds of interest each year, particularly if they leave cash languishing in an account offering dismal returns.
There are two common mistakes diminishing savers' returns.
We’re calculating what these mistakes could be costing you and highlight how a more active approach can ensure you never miss out again.
Savings mistake 1 – not knowing your savings rate
If you don't know what interest rate you're earning, it's impossible to know whether your money is working as hard as it could be.
HL research* shows more than a third (34%) of savers don’t know what interest rate they’re earning on their cash. This means millions could be at risk of losing money in real terms, once you factor in inflation, without realising it.
This figure rises to 62% among those holding savings in a current account. Of those who say they know their rate, only 35% believe it’s higher than inflation, while 28% think it falls short and 17% don’t know either way. Even among savers who have moved their money into dedicated savings accounts, 29% admit they don't know the rate they're receiving.
That lack of awareness can prove costly.
Take the example of a saver with £10,000 in an easy access account. The UK's four biggest banks pay an average of just 0.95%**, yet the most competitive accounts pay more than four times that. Someone with £10,000 in an easy-access account paying 0.95% would earn just £95 in interest over a year but move that same money to an account paying 4% and the return would exceed £400.
With average annual inflation running at 2.9.% to August 2026, the saver earning 0.95% is actually losing around £195 in spending power over 12 months, giving them a real-terms loss on their savings. The real-terms loss would be greater for savers who pay tax on their savings interest. We’ve kept savings rates and the rate of inflation the same in this example to make the illustration easy to follow; however, both rates are subject to change so the actual amount eroded by inflation will be different to the amount shown here.
Despite this, four in ten savers say they have no plans to switch to a better deal. A fifth say it is too much hassle, more than one in 10 admit they know they should move their money but can’t be bothered, 7% don’t know what to look for and 6% say they don’t have the time.
Savings mistake 2 – staying loyal to the same bank over the long term
Loyalty can be expensive when it comes to savings.
Almost two-thirds (64%) of savers have remained with the same bank for more than a decade. The figure rises to 82% among over-75s.
Some might assume that older savers are simply disengaged from their savings, but the research suggests otherwise. Older savers are also the least likely to move their money for a better return. Around a quarter of over-75s say they would not consider switching accounts regardless of the additional interest available.
Keeping your savings with the same bank, either because you trust your provider or have simply banked with them your entire life, might feel like the safest option but it could see a retiree miss out on a significant amount of interest.
While it’s understandable that older savers value familiarity and security over chasing a more competitive rate, they could be missing out on better returns at a stage of life when it really matters.
Pensioners typically hold higher levels of cash than younger savers. While someone of working age may only need an emergency fund covering three to six months of essential spending, retirees ideally need to hold at least one year's worth of spending in cash. The larger the cash balance, the greater the impact of a poor savings rate.
Older savers also have less scope to replenish their savings because they typically rely on fixed incomes from the State Pension, an annuity or private pension savings. This is why ensuring every penny is working as hard as possible is so important.
Looking at the earlier calculation again, assuming interest rates were to stay the same, if the retired saver leaves £10,000 in an account paying 0.95% over a longer period, the difference in interest earned would mushroom to almost £1,723 over five years and nearly £3,912 over 10.
Of course this is only an example, interest rates go up and down over time, and there will rarely be an example of an account that retains the same interest rate for that length of time.
The gender divide
The research also revealed notable differences between men and women.
Men are far more likely to know the rate they’re earning on their savings, (70% versus 61%), while 41% think their rate beats inflation, compared with 27% of women.
Women are also more likely to be unsure whether their savings are keeping pace with inflation, highlighting the importance of regularly reviewing rates and understanding how cash is performing in real terms.
How to make your savings work harder
The good news is that improving returns doesn't have to be complicated – you simply need to be proactive and shop around for a better deal.
Some savers can be put off from switching because they’re concerned about the administration involved, the hassle of managing multiple accounts and logins or the headache of staying on top of ever-changing rates.
Savers also need to keep an eye on introductory bonuses and promotional rates, which can disappear after a set period and leave money earning far less than expected.
There is a simple solution. Savings platforms, like Active Savings, can help people track competitive rates, compare products and move money between partner banks without repeatedly completing new applications or remembering multiple sets of login details.
In today's market, the reward for reviewing your savings can be significant, and a better rate could be worth hundreds in the short term and thousands over the long term.
At the time of writing, Active Savings clients have access to over 125 inflation-beating accounts.
While cash has an important role for emergency funds and short-term goals, money that isn't needed for at least five years may have greater potential to grow in a Stocks & Shares ISA. But investments rise and fall in value so you could get back less than you put in.
While bolstering your cash reserves is important, consider your tax position as well.
Frozen income tax thresholds mean more people are being pulled into higher tax bands through fiscal drag. For those moving into the 40% tax bracket, the Personal Savings Allowance falls from £1,000 to £500, while additional-rate taxpayers receive no allowance at all. You pay tax on your savings interest if you earn interest over your personal savings allowance.
Cash ISAs therefore remain an increasingly valuable shelter from tax on savings interest.
This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.
The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 915119). 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. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown (company number 2122142).