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Are your savings earning just 0% interest?

Your savings could be earning practically nothing thanks to interest rates that drop over time – and you might not even be aware.

The government’s financial watchdog has revealed your savings could be earning zero in interest. And worse affected are those who’ve had the same account for years. The Financial Conduct Authority’s (FCA) report shows the lowest rates at leading high street banks.

The average interest rate for a new easy access savings account is 0.25% - but if you have an older account the average drops to an even lower 0.10% - and you could easily be earning less.

Easy access ISAs fare a little better, with the average for new accounts 0.7%, while closed accounts offer 0.5%.

These are the lowest available rates, and while rates are low pretty much everywhere at the moment, you can still make your money work harder – if you find the right account.

How to find out how much interest your money is earning

If you’re earning tiny amounts of interest it could be because you’ve taken your eye off the ball.

Lots of accounts have bonus rates which end after the first year, while most will be offering variable rate interest – meaning it can go up, or more likely down, at any time.

You should have been notified of any change, but it’s easy for this information to be missed among all the paperwork you get from your bank.

To find out what your money is currently earning you’ll need to find your most recent bank statement which should list the rate of interest. If not you can contact your bank, or look on the bank’s website.

If you find you’re earning very little – or even nothing at all – it’s time to move your money.

How to find better interest rates for your savings

There are options – and what’s best for your money depends on how much you have and when you need to access it.

Current accounts

Some of the best rates at the moment are with high street bank current accounts. You can earn up to 5% with some, though you’re limited by how much money you can save. There could also be other conditions such as minimum deposits each month.

Regular savings accounts

The highest rates are with regular savings accounts, with some banks offering 6%. These are often only for people who are existing customers, so you may need to open another account with them to access these. There are also often low monthly limits for deposits – around £250 or £300 is common.

Fixed savings accounts

You can earn a little more if you’re willing to lock your money away for a year or two. However, if you do need access to your money, you’ll sacrifice some or all of the interest you’ve earned.

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