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It pays to fix your savings - but not as much as it did

02 Mar 2012

Easy access account costs UK savers £551million in 2011 

The second year of research by first direct looking at whether savers should fix their interest rates shows that in the past twelve months, the gap between fixed and variable rate savings returns has closed, meaning the cost to UK savers of not fixing their savings has fallen. 

By choosing not to fix their savings in favour of instant access accounts in 2011, UK savers have seen a loss of possible interest earned of £551 million.* While significant, this figure, although £86million smaller than the £636 million lost in 2010, is mainly due to a fall in fixed account interest rates and a small rise in instant access rates. 

On average, this represents a £57.14 in lost interest to each saver who has opted for the flexibility of having instant access to their savings over the past twelve months, smaller than the £64.53 average loss in 2010 and, in fact, the smallest amount lost over the past five years as the low base rate environment shows no sign of abating. Despite 2011 representing the largest average savings balance in the past five years (£3,243) the fall in fixed interest rates from 2.75% to 2.00% has increased the traditional dilemma of whether to fix or twist with savings. (see tables 1 and 2). This is coupled with the fact that instant access rates in the second half of 2011 were the highest they have been since January 2009. 

Not surprisingly 2008, the year that saw the Base rate plummet to the current 0.5%, was the worst year for variable rate savers when compared to returns on fixed rates.  The average interest rate with a 1 Year Fixed Rate Bond was 5%, while instant access rates varied between 2.77% in January 2008 down to 0.49% by December 2008. Over the course of that year, savers missed out on an average of £92.78 in interest. There were 9 million variable rate savings accounts opened in 2008, with an average balance of £2,932, on which there was a total loss in interest of £835.4 million. 

Bruno Genovese, Head of Savings at first direct commented:  

"While historically, the benefits of fixing your savings has been clear cut, in the current interest rate environment the distinction is less obvious. With inflation falling, and continued economic uncertainty, many savers will be tempted to try to ride out the storm and maintain flexibility with their money.

"When choosing whether to fix or have easy access to their savings, people need to be clear on what they are saving for. If it is more of a rainy day fund for use in case of unexpected events or emergencies, instant access savings are the best idea. However, if the main reason for saving is a particular goal such as a housing deposit or a new car, fixing your savings may be the better option. Of course most people will be saving for a mix of reasons, and so would be best advised to have some money that can be easily accessed and some that is squirreled away, earning more interest." 


Table 1: Instant access interest vs. 1 Year Fixed Rate 2006-2011


Average Savings Balance

Average 1 Year Fixed Rate

Interest with 1 Year Fixed Rate

Interest with Instant Access

Loss in interest






































Table 2: Total amount of interest lost by variable rate savers by not fixing


No. variable rate accounts

Average Savings balance

Average interest lost

Total interest lost


































For further information contact Rebecca Hirst on 0113 276 6899, or Louise Weaver / Hugh Murphy at The Wriglesworth Consultancy on 020 7427 1400, /


Notes to Editors

2011 fixed versus variable savings release 

*Cumulative interest is calculated monthly using average instant access savings rates for each month. For full workings please contact us on 020 7427 1400.

** Jan-Nov inclusive 


Average savings balance data = first direct MI

1 Year fixed rates = Moneyfacts

Instant access rates = BoE

Number of variable rate accounts = CACI's Current Account and Savings Database (CSDB) 

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