While it is now possible to get up to five percent a year from a best buy easy access account, the UK’s biggest banks offer loyal customers much less. Experts are now urging savers to vote with their feet to get a better deal.
The Daily Express has campaigned hard for the country’s largest financial institutions treat their customers more fairly by hiking savings rates.
Last month, City regulator the Financial Conduct Authority (FCA) promised to take “robust action” to end the scandal of unjustifiably low savings rates for loyal customers, but new figures obtained exclusively by the Express show it still has a lot of work to do.
Interest rates on easy access accounts have risen sharply since the Bank of England started hiking base rates in December 2021, but the savings account tables are still dominated by lesser-known challenger banks and the odd building society.
The big banks rarely make a showing.
The top 50 easy accounts now pay an average interest rate of 3.63 percent on balances of £5,000. That’s a huge increase from an average of just 0.46 percent in November 2021, when base rates were still just 0.1 percent.
However, easy access savers at the major banks get less than half that earning 1.52 percent on average.
That’s the typical return from Barclays, HSBC, Lloyds, NatWest and RBS, plus other big names Bank of Scotland, Halifax, Santander, TSB, Virgin Money and Metro Bank.
The gap is closer for one-year fixed rate savings bonds, where the big names are finally responding to pressure and making a better fist of things.
Here the average return from the top 50 one-year fixed rates is 5.44 percent, with the big banks close behind paying an average of 4.97 percent.
The research was compiled by Andrew Hagger, banking specialist at MoneyComms, who said the big banks are lagging the easy access market and need to raise their game.
Almost £250billion is thought to be languishing in savings accounts that pay next to no interest, most of them easy access accounts taken out years ago.
Earning zero interest is even more damaging today as inflation runs rampant and erodes the real value of cash. No best buy account can match July’s 6.8 percent inflation rate.
David Hunt, head of retail savings at Investec, said savers cannot rely on their provider giving them the best deal and must shop around and move their cash if necessary. “Even among the top 50 providers there are major differences in the rates paid.”
Investec’s Online Flexi Saver pays 4.47 percent on balances between £5,000 and £250,000, with instant, unlimited withdrawals.
Anna Bowes, founder of savings rate tracking service Savings Champion, says easy access rates have hit their highest level since 2009 as banks anticipate further base rate hikes.
“Furness Building Society’s Triple Access Saver account now pays a market-leading rate of five percent on £1 and above. However, it does have restrictions as savers can make just three withdrawals per year.”
While most best buy accounts are only available online, the Furness deal must be opened and managed either in branch or via post. “Some will see this as a positive,” Bowes said.
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The next best easy access rate is from Beehive Money, which pays 4.90 percent on balances starting at £1,000. However, this includes a bonus of 2.25 percent that expires on August 31 2024.
Afterwards, the rate will fall sharply.
Savings app Chip pays 4.84 percent and Shawbrook Bank pays 4.83 percent, which are not inflated by a temporary bonus.
Easy access variable rates are increasing by the day but rates can also quickly be withdrawn. Tandem Bank was paying five percent last week but has since been removed from sale.
While easy access rates rise the returns on best buy fixed-rate bonds seem to have peaked, as banks and building societies anticipate that the Bank of England may start cutting base rates next year.
It is still possible to get a five-year fixed-rate paying 5.80 percent, though, currently offered by both United Trust Bank and RCI Bank.
The highest interest rate of all is on a two-year fixed rate bond by Recognise Bank. This pays 6.1 percent.
Savers who lock in today may find they are soon getting inflation-beating return. On a five-year fix this could last for several years.
Easy access rates have improved dramatically but when the BoE finally starts cutting rates, they will fall just as quickly as they rose. As ever, savers will have to keep on their toes.
