Lloyds, Santander, Barclays savers urged to act or risk £1,222 a year shortfall

Savers have been given a stark warning that their lack of action could be costing them as much as £1,222 a year. Experts from Hargreaves Lansdown are urging individuals to check if they could secure a better interest rate by switching providers.

The investment firm notes that the wealthiest 20 percent of households typically have about £36,276 in savings, and if you had this amount and you sticking with a well-known bank rather then going for the top paying rate, you will miss out on £1,222 each year. Research commissioned by the company found that one in three savers haven't switched accounts in the last five years.

Sarah Coles, head of personal finance, commented: "Despite all the movement in rates, three in five savers haven’t switched their savings in the past year and almost a third haven’t switched in the past five years. The whole notion of switching is off the table for millions of people.

"Almost a quarter of savers have never switched their savings and two fifths don’t have any plans to switch at any point in the future." Ms Coles stressed the case particularly for older Britons, warning that it's "particularly worrying" that 44 percent of over 55s have no intentions of changing their savings provider in the future.

Yet the common advice is that retirees should keep one to three years’ worth of cash as an emergency fund. Additionally, the slashing of interest rates has also dissuaded many from switching, with 60 percent not having changed in the past twelve months, compared to 53 percent just six months prior.

This follows the Bank of England's decrease of the base rate in August from 5.25 percent to five percent, which has remained unchanged in recent decisions, prompting several providers to lower their rates.

If you are shopping around for a better deal on your savings, you may want to consider that you can get some free cash in the process, as several banks have switching offers. Santander recently launched an £150 offer when opening a current account with them, while others banks also have switching offers, including Barclays, Lloyds Bank and NatWest.

Amy Knight, personal finance expert at NerdWallet UK, suggested that banks might introduce more cash incentives as high rates continue. She stated: "Spending announced in the Labour Budget could force the Bank of England to lower interest rates more cautiously to stay on top of inflation. Higher rates dampen the demand for borrowing and with fewer people shopping around for loans, we may well see banks using cash bonuses to draw in new customers, increasing deposits instead."