The cost of staying loyal to your high street bank
Most of us stick with the same bank once we've opened an account, not realising there are far better options available
Sarah Coles ·
Personal Finance Columnist
Mon 15 December 2025 at 10:48 am GMT-5
3 min read
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People’s relationships with high street banks are fairly dysfunctional. They don’t particularly love what they have to offer, or how they’re treated, but once they open an account, they hang around for decades with them because they can’t face having to find something new.
Unfortunately, once people are settled with a current account, they’re very likely to stay put for all their other finance needs too. Our research shows that 42% of people hold savings with the same bank as their current account, and one in five of them never even consider an alternative.
It means we’re remarkably unlikely to switch savings accounts. The research shows that despite the Bank of England bringing in a handful of rate cuts over the past year, and the high street banks enthusiastically passing them on, 56% of people haven’t moved their savings during that time. In fact, a third haven’t switched in the past five years and more than a quarter have never made the change. When asked if they would ever switch at any time in the future, 43% of people said no.
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Being loyal to your bank is always an expensive business, but it can be especially so at a time of falling rates – when the high street giants have slashed rates a lot more than competitive online banks and savings platforms. Unfortunately, inertia can be even more powerful in this environment, because people assume rate cuts are the same across the board, so they don’t bother switching.
The risk is that this cash is still sitting in high street savings accounts, which currently pay an average of 1.15%. With inflation at 3.6% it means that every passing month sees the spending power of your savings drop. It’s easy to miss this when you’re seeing interest payments go into the account every month, but you’ll soon see the impact when you come to spend it.
By contrast, the most competitive banks are offering 4.5% on easy access savings, so if you have £20,000 in an average branch-based high street easy access account, misplaced loyalty is costing you £688 a year. The 20% highest earning households in the UK hold an average of £29,898 in savings. The difference between average rates from the high street giants and the best on the market would cost them £992 a year.
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Shopping around can get you a much better deal, but it’s also worth considering what this money is for, and when you need access to it. Some of it will be emergency savings. When you’re working age, you need cash to cover three to six months’ worth of essential spending in an easy access savings account or cash ISA, and when you have retired you should be able to cover one to three years’ worth.
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However, some of it will also be lump sums you’ll need at specific times over the next five years, for everything from big holidays to home improvements, which can be fixed for the most suitable periods.
Once you know exactly what you need, you’re in a position to track down the best deals. There is some legwork involved, but if you choose online banks it should make life much easier. If you’re opening a number of different types of accounts, you can cut the paperwork by doing it through a savings platform.
Breaking the bond of loyalty and finding a better deal is unlikely to be the most exciting hour of your life, but it could be one of the most financially rewarding.
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