Leaving your savings to dwindle in popular high street banks could be costing you hundreds of pounds a year, a savings expert has warned. He is urging savers to look beyond high street banks like Barclays, Natwest, Nationwide and Santander if they want their money to really work for them in 2026.
Matthew Jenkin from the consumer group Which? says people often fall into “traps” which can cost them hundreds of pounds. Mr Jenkin said: “One of the biggest mistakes you can make when looking for the best home for your savings is limiting your search to the high street. The familiarity of a household name may feel safe, but breaking out of your comfort zone and choosing a smaller lesser-known provider could leave you better off.” He said investors with £10,000 savings would be better off looking at online operators for better interest rates.
He pointed out that the difference in interest could reach £333 over a 12-month period for a sum of £10,000.
Mr Jenkin added: “If you invested £10,000 in a high street account paying 1.15% AER – the average high street rate – you could expect to earn £115 in interest over a year. But if that balance was invested in the top account for larger deposits you’d earn 4.48% AER and your annual interest income would increase to £448. That’s a difference of more than £300. If you’re nervous about saving with a bank or platform you’ve never heard of, there are some checks you can perform to ensure your money is protected.”
But he warned it is important to check any online platform is covered by the Financial Services Compensation Scheme (FSCS), which safeguards up to £120,000 of a saver’s pot should it go bust. He added that while challenger banks must adhere to the same rules and regulations as other banks, not all of them are FSCS-protected.
As of January 2026, the online-only accounts offering the best savings rates are the Chase Saver (up to 4.5% AER) and the Cahoot Sunny Day Saver (up to 5% AER) for easy access in the UK, The Mirror reports.
But Mr Jenkin added: “Rates can chop and change so fast, it can hard to keep up. But neglecting your savings can cost you. That’s especially true when it comes to deposits in fixed accounts. Unless you tell your bank or building society what to do with the money when the bond matures, your provider may automatically move your cash into a lower-paying or notice account, or return it to your current account where it earns little or no interest.”
He pointed out that some headline rates also include temporary bonuses that expire after a few months adding “Make a note of when your term or bonus rate is due to end then switch as soon as possible.”
Mr Jenkin suggested that people should consider using a savings platform that allows them to open and switch between multiple accounts through a single login, without having to fill out a new application each time.
“Some deals available on savings platforms are exclusive, and some platforms will alert you when a better rate becomes available. But watch out for those that charge a fee. This is sometimes taken as a cut of the interest rate before it’s displayed, or deducted as a percentage of your balance.”
“If you really want to save like a pro, one strategy to try is called ‘split and save’;. This involves keeping some flexible funds in an easy-access account and spreading the rest across several fixed-rate accounts that mature at different times.”
Another route worth considering is locking money into longer-term fixed rates. He explained: “Most providers stop at five-year terms, but Moneyfacts data shows a few banks now offer bonds lasting up to seven years. But think carefully before you commit to such a long time. While rates are falling now, a lot can change in just a few years.
He also warned against paying ‘unnecessary tax'”There is a limit to how much interest you can earn on your money before you face a tax bill. Basic-rate taxpayers can currently earn up to £1,000 in interest tax-free, higher-rate taxpayers £500, whilst additional-rate taxpayers receive no allowance whatsoever.
“So if you have a large sum to reinvest, opening a cash ISA can currently help you shield up to £20,000 a year from the claws of HMRC.
However, from 2027, the amount you can hold in cash will fall to £12,000 for savers under 65.
