Miserly banks short-change savers

SAVINGS are in such a ‘sorry state of affairs’ that the proportion of accounts paying interest above the Bank of England base rate has hit a five-year low, a report has found.

The analysis of the savings market has sparked renewed concern that banks and building societies are not passing on last month’s interest rate rise to savers.

According to the report, less than 69 per cent of savings accounts are paying above the base rate of 0.75 per cent. By contrast, in September 2016 and September 2017, 77 per cent of accounts had interest rates above the base rate.

The analysis, carried out by Moneyfacts UK, also showed that average interest paid on instant access ISA accounts has actually fallen since two years ago, despite two rate rises by the BoE.

Since August’s rate rise, many financial institutions have only made paltry increases in the interest they pay. In one example, Nationwide offered savers holding e-ISA a miserly 0.05 per cent more – a fifth of the BoE rise.

Charlotte Nelson, of advice service Moneyfacts, called the situation a ‘sorry state of affairs’. She said: ‘Despite two rate rises, savers are still not seeing any real improvement in rates. The fact that the percentage of the savings market that pays above base rate has fallen by a whopping 5 per cent in just one month, proves that many have failed to pass on the full increase, if they have done so at all.’

Mark Carney, governor of the Bank of England, said last week that savers had had to be hurt to rescue the economy after the financial crisis.

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