Fight back against £4m interest rate betrayal

. . . that’s how much banks pocket everry day by failing to pass on the rate rise to savers. Here’s how to make them pay

TODAY, Money Mail urges you to ditch the big banks which are plundering millions of pounds a day from savers and borrowers.

We can expose the cynical tactics Britain’s savings giants have used to hit savers in the pocket. HSBC, Santander, Lloyds, Barclays and RBS-NatWest all slashed the returns on their main easy-access deals before last week’s rise in the Bank of England base rate, which went from 0.25 pc to 0.5 pc.

None of the big five banks now pays more than 0.25 pc.

In the worst cases, HSBC Flexible Saver and NatWest Instant Saver pay 0.01 pc.

And even the best deal on offer is only 0.25 pc from Santander eSaver issue 15. Only its 123 World or Santander Select customers get this rate — for others it’s an even lower 0.15 pc.

To add insult to injury you only earn this rate for a year, after which your money is switched into its Everyday Saver, paying an even lower 0.1 pc.

The big banks pared back the rates they pay savers while the base rate stayed frozen at 0.5 pc between March 2009 and August 2016. They made more cuts after the base rate was halved to 0.25 pc in August last year.

In April 2016, NatWest cut the rate on its Instant Saver to 0.25 pc. Previously it had paid 0.5 pc on balances up to £50,000 and 0.75 pc on higher amounts. This did not stop it dishing out another cut in October last year after the base rate fell to 0.25 pc, so savers now earn a derisory 0.01 pc, or 10 p a year on each £1,000.

Barclays cut its Everyday Saver on August 1 last year to 0.25 pc for all savers. Previously it had paid up to 0.6 pc depending on the size of your balance. It made another cut last December, following the August 4 base rate fall, to pay savers just 0.05 pc.

Some banks even cut rates in the run up to this month’s expected base rate rise.

Halifax Everyday Saver paid 0.25 pc to new customers until October 10, when it cut its rate to as little as 0.05 pc for those opening an account after that date. Lloyds’s Easy Saver rate halved to 0.05 pc from 0.1 pc on September 26.

Now these giant firms are stubbornly refusing to pass on the rise in interest rates to savers, saying only that the situation is ‘under review’. Private meetings have been held at all the big banks, but officials are worried about increasing rates when their rivals may not.

Last night, Santander and RBS-NatWest said they would make an announcement shortly, while Lloyds and Barclays say rates are still under review.

Lloyds says if it does make any changes, they won’t take effect until December 1 at the earliest.

HSBC says its savings rates are ‘not directly linked to the Bank of England Base Rate’, but it is still reviewing these in light of the base rate rise and ‘other factors’.

RATES RISE WHEN IT SUITS THEM

THE delay in passing on the rate rise is depriving savers of £4 million a day, according to estimates from consultancy DJB Research. By contrast, the big banks have been far less reluctant to pass the rise to credit card and mortgage holders.

A series of hikes since 2009 means banks are pocketing £822 million more a year from card customers than they would have if they’d left rates alone. Barclaycard, Lloyds and Halifax are about to put rates up on the basis that some of their cards are linked to the base rate.

The cost of mortgages is also rising. All major lenders have automatically increased the cost of tracker mortgages for 1.4 million customers. Nine lenders have already hiked their standard variable mortgages, and others are understood to be preparing similar moves.

Coupled with the huge cuts to savings rates over the past year, the rise in mortgage and credit card rates means banks are expanding their profit margins.

The difference between what Lloyds Banking Group, which encompasses Halifax and Bank of Scotland charges borrowers and what it pays to savers has expanded from 2.74 pc a year ago to 2.9 pc. Santander’s rose from 1.79 pc to 1.91 pc. Analysts think the banks will pocket an extra £500 million a year thanks to last week’s base rate rise.

So today Money Mail calls on savers and borrowers to fight back.

Don’t let the greedy banks get away with ploys to make more money from you. Make them pay by switching to the best deals on the market. Only when bank bosses see an exodus of thousands of customers will they even consider changing their ways.

GET AN EXTRA £100 ON SAVINGS

EvEN if the big banks pass on all of the 0.25 percentage point rise, you could still earn as little as 0.26 pc.

New banks and building societies are increasing their rates to pay over 1 pc on easy-access accounts in the High Street or 1.3 pc if you run your account online.

By switching to the best deal, you can earn more than £100 extra interest a year on each £10,000.

If you are happy running your account on the internet, go for RCI Bank UK’s Freedom Savings Account at 1.3 pc or Ford Money Flexible Saver at 1.17 pc.

With French-owned RCI Bank your money is covered up to €100,000 (around £88,000) by the French compensation scheme. With Ford Money you come under our Financial Services Compensation Scheme giving £85,000 of cover. Both banks

pledge to keep their rates near the top of best buy tables. In the High Street, search out your local building society. Coventry and Yorkshire, along with Newcastle, are passing on the 0.25 point increase to savers in variable-rate accounts. The Coventry Easy Access 4 rate up to 1.1 pc from December 1 while Newcastle has already upped its Community Saver 2 rate to 1 pc. The Coventry account is also available to open and run by post or over the phone.

You can open and run NS&I Direct Saver over the phone. It pays 0.7 pc, but this could rise if the state-owned agency passes on the 0.25 pc as expected by the Government. But it has refused to commit to doing so.

Most Nationwide savers will benefit from the full rise. But its Help to Buy Isa and Save to Buy Isa will continue to pay 2 pc and its Flexclusive Regular Saver 5 pc. The biggest building society says these won’t move as they did not suffer a cut following last year’s 0.25 percentage point cut in base rate.

Skipton savers in accounts on sale now will benefit from the full rise taking its eSaver 7 rate up to 1.06 pc. On its accounts closed to new savers, the society has only pledged no saver will earn less than 0.5 pc.

Among the new banks, Aldermore Easy Access goes up to 1 pc. Savers opening an account now will benefit from the new rate immediately. Those in its closed issues 1-10 will see the increase from December 10. Hampshire Trust is also passing on the full 0.25 pc.

Ikano Bank has already raised its Easy Access rate to 1.01 pc.

LOCK DOWN A CHEAP MORTGAGE

FIx your mortgage as soon as possible. The Bank of England warned it is likely to increase the base rate at least twice over the next three years, taking it up to 1 pc by 2020.

That would push the repayments on a £150,000 mortgage on the typical 4.6 pc standard variable rate from £842 a month to £908 — an extra £66 a month, or £792 a year.

Banks began pulling their best deals even before the Bank of England acted last week — so you’ll have to move fast. There are no mortgages available below 1 pc as Yorkshire BS’s 0.99 pc two-year fix was scrapped weeks ago.

According to data firm Moneyfacts, fixed mortgage rates rose at their fastest pace in eight years between October and November. Now the average two- year fix is 2.33 pc, compared to 2.21 pc last month. The cheapest two-year fix is 1.09 pc from Atom Bank although you must go through a broker and download an app. AA Mortgages offers a twoyear fix at 1.18 pc with a fee of £1,495 — £578 a month on a £150,000 loan.

If you can, consider a five-year fix. The top rate is First Direct’s 1.74 pc. It costs £617 a month on £150,000 — £39 a month more than AA’s twoyear deal. It has a £725 fee.

First Direct also offer a rate of 1.84 pc with no fee.

If you want to remortgage and are locked into another fixed-rate deal, check if there are any penalties for switching elsewhere. These can be up to 6 pc of the outstanding balance — or £9,000 on a £150,000 loan.

Many lenders, including Tesco Bank, NatWest and Barclays, let you reserve rates up to six months before your current deal ends.

STOP PAYING HIGH CARD CHARGES

BANKS have been quietly hiking credit card rates since 2009, and they now average 17.96 pc APR. This is what you pay if you fail to clear your balance at the end of each month.

If you are in a position to clear your balance but forget to pay the bill on time, set up a monthly direct debit for the full amount. That way you won’t face any interest charges.

If you’re struggling, do you have money in a savings account that earns next to nothing? Consider using this to clear the debt. Alternatively, go for a balance transfer card. These deals allow you to shift debts to a new card where the rate is 0 pc for as long as two-and-a-half years. Your repayments go towards clearing your balance, rather than covering interest. But if you haven’t repaid the transfer amount by the time the 0 pc period is up, you could face hefty charges. Santander’s All in One Credit Card offers 39 months at 0 pc interest with a £3 monthly fee. After that you’ll also pay 21.7 pc on anything you haven’t paid off.

Virgin Money Balance Transfer Credit Card offers 0 pc for 38 months. Transferring the debt to the card costs 1.5 pc — so £30 for moving £2,000. The APR is 20.9 pc once the 0 pc period ends.

If you intend to spend on credit, go for a ‘ purchase’ card with a lower rate. The Post Office Money Matched Card offers 30 months of 0 pc interest. Some cards offer both balance transfers and 0 pc on purchases. Lloyds Bank’s Platinum Balance Transfer Credit Card has 33 months interest-free on balance transfers and three months on spending. After that the rate is 18.9 pc.