Battle for savers most intense for 12 years

The battle for savers has intensified with the choice of products at its highest level for 12 years, according to analysis.

UK savers have a choice of 2,014 savings deals – the highest number since 2012, the financial information service Moneyfacts says.

However, people may have to shop around for the best deals, with loyalty often bringing the lowest returns.

In addition, interest rates may drop if the Bank of England decides to cut the benchmark rate in August.

Moneyfacts said the choice of accounts was greater than anything seen since May 2012. The number of providers had also risen.

Of the 2,014 savings deals now available, 571 are cash ISAs – which are tax-free savings accounts.

The gap in potential returns for those willing to lock money away for a certain period has widened.

The average easy-access savings account pays 3.11%, Moneyfacts said, compared with 4.29% on so-called notice accounts.

The Bank of England’s next decision on the Bank rate – which influences the savings and mortgage rates that banks and building societies set – will be on 1 August.

Analysts believe the choice of whether to cut the benchmark rate stands on a knife-edge, although a cut at some point this year is widely expected.

With that Bank rate currently at 5.25%, the returns being offered by savings providers have been higher than anything seen for a decade or so.

Banks and building societies were heavily criticised for the speed at which those rates went up, and what was on offer for more loyal customers.

Last year, MPs on the Treasury Committee said big banks were doing “as little as they can get away with” when setting those rates.

Moneyfacts said customers would be “short-changed” if they did not review and switch accounts away from products that were closed to new savers.

“Savers must shake any apathy they have to move their pots, otherwise they will be left disappointed when their loyalty is not rewarded,” said Rachel Springall, from Moneyfacts.

A recent study by academics at Bristol University suggested that saving money regularly could help people sleep better.

• As a saver, you can shop around for the best account for you
• Loyalty often doesn’t pay, because old savings accounts have among the worst interest rates
• Savings products are offered by a range of providers, not just the big banks. The best deal is not the same for everyone – it depends on your circumstances
• Higher interest rates are offered if you lock your money away for longer, but that will not suit everyone’s lifestyle
• Charities say it is important to try to keep some savings, however tight your budget, to help cover any unexpected costs
• There is a guide to different savings accounts, and what to think about on the government-backed, independent MoneyHelper website

What are interest rates? A quick guide