Online savers are making the most of better interest rates.
More and more of us are moving online. According to a report released earlier this month by the Office for National Statistics (ONS), internet usage among people aged 75 and older has jumped considerably during the pandemic. In fact, only 20% of the 75+ crowd was online in 2011. The number was 47% in 2019, and in 2020 it was 54%.
The numbers are even bigger in the 65-74 group, where 86% had regular online access in 2020.
And while this change has many positives, a key benefit is the potential to help people save an additional £463 over five years.
Plot your path towards financial freedom with our Hero’s Journey tool!
MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.
This tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.
Are online savings accounts worth it?
According to Sarah Coles, personal finance analyst at Hargreaves Lansdown, “The pandemic has widened the gap between those who are online and those who aren’t”.
Getting online offers benefits connected to work, shopping and staying in touch with family. But Coles points out it has also enabled online savers to get better deals on their savings accounts despite the falling rates.
“The best online savings accounts pay up to ten times the interest of the best on the high street,” explains Coles. “On an easy access account, this can mean £373 more interest over five years, and if you fix, it can add £463.”
These calculations are based on the very different interest rates offered by online (0.4%) vs regular (0.03%) savings accounts. The rates are even better for a two-year fixed savings account, with 0.8% online compared to 0.35% at regular banks.
How can online savers choose the best savings account?
Online savers of any age can benefit from the flexibility of managing and switching accounts with just one click. But the older generation will benefit even more. According to the ONS, 2.1 million of those who are 75+ have never used the internet. For them, learning how to take advantage of better interest rates might require some help.
“If you know an older person who’s worried about going online, then it’s well worth talking to them about the benefits,” explains Coles. “If you’re in the same bubble, then you can take them online to show them how it works. You can then make a date to regularly check how it’s going, and help them get back online if they need support.”
3 reasons to start a savings account today
With interest rates for saving accounts staying low at most banks, a lot of people are probably wondering why even have one. But a savings account has many benefits, especially for online savers who can also take advantage of better interest rates:
- It’s the best way to be ready for emergencies. Investments aren’t always available right away, so keeping cash easily available is important.
- It helps you organise your finances better and reinforces the idea of putting money aside instead of spending it. Having cash easily available in your current account might be more tempting.
- It keeps your money safe from events like theft or fire. Your money is also insured and protected at all times.
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.