Banks pay just 0.04pc on easy ac­cess deals

Daily Mail - - Money Mail - By Sylvia Mor­ris sy.mor­ris@dai­ly­

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.

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