Money saving expert Martin Lewis is urging all savings account holders to check how much interest they are making.
The financial guru warned that if you are currently storing your cash in an account with a rate under 2.5 per cent then you need to ask now to boost it. He went on to explain that 2.5 per cent is the lowest rate anyone should be earning, on any savings account, following the Bank of England's recent base rate hike to 3 per cent.
The expert took the time to advise during the latest edition of The Martin Lewis Podcast on BBC Radio 5Live as he chatted through the saving account tips with co-presenter Nihal Arthanayake, reports The Daily Record.
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Martin told listeners that there's a "savings rip-off" at the moment. This is because inflation is currently running over 10 per cent, with most savings accounts falling far short. The consumer champion stated that many are in fact "losing" due to the interest accounts are currently earning, with even the top savings accounts at a much lesser rate than inflation.
He explained: “Most people who have got savings are earning less than 1%, the average easy-access savings account is paying just 0.75%.
“I want to show you how to stop the savings rip-off and it is indeed a rip-off for most, you should not be earning anything less than 2.5% on your savings that is my absolute, complete bottom-out on the savings rate you should be getting.
"With inflation running at over 10 per cent at the moment, most savings aren’t savings, they are in fact ‘losings’ because in real-terms the interest you’re earning even in the top accounts is far less than inflation.
“Now that isn’t a reason not to get the best savings interest rates, in fact, I would say it should put more of a fire up your backside because the more you earn in savings, the more you mitigate the damage of inflation on the cash that you have worked hard to store up over the years.”
As Martin issued the advice, the co-host logged on to check his own saving count rates and was left shocked when reading the 0.5 per cent rating, going on to explain the discovery as a "liberty".
In reaction, Martin said: “Let Nihal’s lackadaisical attitude to money be a lesson to all of you listening.
“The vast majority of you have savings paying virtually nothing, everybody listening unless you’ve done this exercise in the last few weeks need to check now what interest you are earning on your savings.
“In almost all cases, unless you’re in a fix, to change savings you just withdraw the money and you put it in a new account.”
However, the money expert warned that it may not always be possible switch as simply if your money is in a cash Isa as you need to transfer it or you will lose the current cash Isa status.
He also advised anyone with expensive debt to clear that first before opening a savings account.
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