Huge net gains for savers who snub big banks

DISGRUNTLED savers are voting with their feet in protest at the latest wave of branch closures by switching their deposits away from the big high street banks.

In most cases they are getting a better return too, as today’s best savings rates are reserved for those who can manage their money online.

Savers are ditching branchbased savings accounts as closures speed up, from 425 in 2022 to 633 in 2023, research from Investec Bank shows.

Another 245 closures are already confirmed for this year, and the numbers are likely to rise even higher as banks slash networks to boost profits.

Consumer champion Which? has warned customers against switching to a bank offering local branch access as there is no guarantee this will continue.

In practice, they are doing the opposite. Around 6.6 million have closed at least one branchbased savings account in the past two years, with more than a million expected to follow suit within 12 months.

Among those who switched, almost two thirds moved their money into savings accounts run online or by mobile phone app.

The research also shows that of the top 50 two-year fixed rate savings accounts just 14 are branch-based, down from 20 in 2018, as online options dominate the savings rate tables.

As bank and building societies close branches, more people have been shutting down linked savings accounts and opening online ones instead, said David Hunt, Investec head of retail savings. “Many of the best buy accounts are online-only, so switching from branch-based accounts could result in a better rate of interest on your savings.”

Lucinda O’Brien, savings expert at Money.co.uk, said online savers can now get a market- leading 5.21 per cent from Smart-Save’s best buy fixed-rate one year savings bond. “The downside is savers need a minimum deposit of £10,000 to access this account.”

Investec pays 5.15 per cent for one year on a minimum £5,000, while Aldermore pays 5.11 per cent on £1,000 and above.

Hampshire Trust Bank pays a fixed rate of 4.54 per cent a year for five years, while Isbank pays 4.50 per cent over the same term, only available through savings platform Raising UK.

As this year’s Isa season draws to a close, Kent Reliance pays a market-leading fixed rate of 5.07 per cent for one year on £1,000 or more in its cash Isa, while Aldermore pays 5.05 per cent.

Over five years, United Trust Bank pays 4.05 per cent, with Paragon paying 4 per cent.

With the Bank of England expected to start cutting interest rates from May or June, now may be a good time to lock into a longer term fixed rate, but only if you are certain you will not need access to your money in that time.

For those who do want branch access, local building societies may be the best option with Furness, Mansfield, Melton, Nottingham, Principality and the West Bromwich all offering competitive cash Isa rates.