Martin Lewis issues urgent warning to UK savings bank account holders over interest rates

ITV money man Martin Lewis urges all UK residents who have invested in a savings account to check their interest rates – warning that if yours is below 2.5% you should act now to give it a boost.

The financial expert also revealed that this was the minimum rate anyone should earn on their savings, regardless of account type or size, after the Bank of England’s recent base rate hike to 3%.

In his latest edition of The Martin Lewis podcast on BBC Radio 5 Live, Martin explained that there is currently a ‘savings scam’ going on, and with inflation running over double digits, most savings are not savings and are in fact ‘losses’.

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The Daily Record reports that’s because the interest you earn — even in the best savings accounts — is well below inflation. Speaking to co-presenter Nihal Arthanayake: “Most people who have savings earn less than 1%, the average easy-to-access savings account only pays 0.75%.”

He added: “I want to show you how to stop the savings scam and it is indeed a scam for the most part you should not earn less than 2.5% on your savings this is my background absolute and complete. on the savings rate you should get. With double-digit inflation right now, most savings aren’t savings, they’re actually “losses” because in real terms, the interest you earn on even the largest accounts, are well below inflation.

“Now that’s no reason not to get the best savings interest rates, in fact I would say it should set your back on fire because the more savings you earn the more damage you mitigate inflation on the money you’ve worked hard to accumulate over the years.

During the podcasting session, Nihal then checked his own savings rate and was stunned to find his rate was just 0.5% – calling it a “freedom”. Martin, replied, “Let Nihal’s nonchalant attitude towards money be a lesson to all of you who are listening.

“The vast majority of you have savings that are earning next to nothing, everyone is listening unless you have been doing this exercise for the past few weeks you need to check now what interest you are earning on your savings. In almost all cases, unless you’re in deep trouble, to change your savings you simply withdraw the money and put it in a new account.

Although he did warn that it’s not that simple if it’s a cash Isa that you have to transfer it or else you’ll lose cash ISA status. He also advised anyone with expensive debt to pay it off before opening a savings account.

Martin has also listed some of the best easy access offers offering 5%, but as these rates can change quickly, the best place to find them is the dedicated section of MoneySavingExpert.com – the consumer website he founded – which is updated daily.

You can listen to the full podcast on BBC Sounds here.

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