Experts have claimed that millions of people could benefit from a better return on their savings by switching deals rather than waiting for banks to increase rates, with the city regulator stating that they are missing out on up to £480m in interest.

The Bank of England (BoE) governor Mark Carney has suggested that new entrants to the market are increasing competition and creating better deals, but others argue that competition rarely works in banking.

On Thursday 2 August the BoE increased its base rate from 0.5% to 0.75%, the second increase since the financial crisis. The base rate serves as a benchmark for banks and building societies to use as a guide to set the interest rates they charge borrowers and pay savers.

Following the increase, many savings product providers are watched closely to see whether they will raise their rates in line with the base rate, especially since savers had suffered from poor returns for so long. Following the previous rise in November 2017, interest paid on half of all savings accounts failed to increase at all and, of those that did, the average rise did not match the BoE’s increase.

In light of this, Savings Champion head of research Tom Adams said that rather than waiting, savers could get a better deal by moving off an old deal that might pay roughly 0.5% in interest, or as little as 0.05%, to a better deal offered by a competitor.

Adams reported that the leading rates for instant access savings accounts are “well over” 1%, so switching to a new savings account would be more beneficial than hoping and waiting for the base rate to rise.

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