Banks pay just 0.04pc on easy access deals
SAVERS in accounts with big banks need to move their money now. Two years ago, the average rate paid by Britain’s eight biggest banks to loyal savers with easy- access accounts was 0.33 pc, a Money Mail investigation reveals. That is now down to a pitiful 0.04 pc, with the NatWest Instant Saver, RBS Instant Saver and HSBC Flexible Saver paying just 0.01 pc.
By switching to a better deal, you can up your interest to just over £100 on each £10,000 rather than the meagre £4 average the big banks are willing to pay.
Our analysis focused on Lloyds, Halifax, TSB, Santander, NatWest, RBS, HSBC and Barclays. The average from these banks is now nearly 1 percentage point less than the top rates paid by newer banks.
Top deals include internet bank RCI’s Freedom account at 1.1 pc, or 1.05 pc from Virgin Money in the High Street.
Despite rates getting vastly worse, faithful savers have still piled £1.2 billion a month into them over the past six months, figures from the British Bankers’ Association show.
They now hold a huge £833.4 billion in these miserly accounts. While newer banks and building societies have been edging rates up, big banks refuse to join in. They prefer to get money at rock-bottom rates from the Bank of England rather than help savers.
Cash Isa savers have also been hit. The average easy-access rate from the big banks is now 0.15 pc, down from 0.74 pc two years ago — or 0.49 percentage points.
Worst hit are savers in Barclays Instant Cash Isa, down from 1.28 pc to 0.4 pc on balances of £ 10,000. HSBC Loyalty Cash Isa, for its current account holders, has seen a similar drop — down from 1.4 pc to 0.3 pc.
In contrast, Virgin Money’s rate is down a smaller 0.35 percentage points from 1.4 pc to 1.05 pc.
The case for moving is increasingly urgent as inflation picks up. If you don’t move, as well as earning virtually no interest, you will see the face value of your nest- egg falling. The cost of living is rising, eating away at your savings and reducing your spending power.
Two years ago, the cost of living was falling by 0.1 pc a year. It is now rising at 2.7 pc a year — more than you can earn on a savings account. With a top bank’s rate of 0.01 pc, your money is losing value at an alarming 2.69 pc a year, including interest. That means £10,000 of savings is worth £9,731 after 12 months. With a top paying account at 1 pc you will still lose out to the tune of 1.7 pc but at least you will soften the blow. Fixed-rate deals from big banks are also very low. HSBC pays just 0.5 pc for one year, less than you can earn on an easy-access account elsewhere. Halifax and Barclays pay 0.55 pc. Top rates on offer from other banks include 1.55 pc from web-based Charter Savings Bank for one year or 1.76 pc for two years. Fixed-rate cash Isa also pay much less at the big banks. Lloyds offers a derisory 0.55 pc and Halifax 0.6 pc if you tie up your money for two years. Top deals from newer banks and building societies include 1.13 pc from Bank of Cyprus and 1.11 pc from Virgin Money for one year and Paragon Money at 1.26 pc for two years.