Savers have been urged to read up on the rules for their account or they could find the growth on their savings swallowed up by surprise fees.
Andy Mielczarek, CEO of Chetwood Financial, said that now it’s “more important than ever” to make sure you are getting the best rate on your savings, as rates are set to fall.
He suggested several tips for people looking to switch to a better deal and issued caution about little-known fees that could scupper your progress in building up your savings.
He explained: “Before moving your money, ensure that there are no penalties for withdrawing early from your current account. These fees could offset any potential gains from switching to a higher-rate account.”
Many providers will charge a certain number of days of interest for early withdrawals.
For example, Virgin Money currently offers a competitive 4.75 percent with its 1 Year Fixed Rate Cash ISA Exclusive.
Customers can withdraw funds and switch to another provider whenever they want but the terms and conditions state: “You’ll be charged 60 days’ interest on the amount taken out during the fixed term.”
Savers may also be tempted by the Barclays’ 18-Month Flexible Bond, which currently pays 3.9 percent.
But customers can also close their account early in specific circumstances, and even then there may be a fee to pay.
The terms state: “If early closing is allowed, you may have to pay a fee. We’ll tell you what this is when you open the Flexible Bond.”
Providing some other tips for switchers, Mr Mielczarek suggested to savers to shop around and search beyond traditional high street banks when looking for the best deal.
He explained: “Challenger banks and online-only institutions often offer more competitive rates due to lower overheads.”
The financial expert also urged people to think through what your financial goals are, as this will determine what sort of account will suit you best.
He commented: “If you’re looking for stability over the long term, a fixed-term account might be suitable, but remember that these accounts typically require you to leave your funds untouched for a set period.
“However, if rates do drop further, it’s safe to assume easy-access rates will drop with it.”
He also said it may pay to act quickly to secure the best rates before they drop further. The Bank of England has dropped the base rate from 5.25 percent to five percent with some analysts predicting it will fall again this year.
