£2.7billion betrayal

As banks fail to pass on successive interest rate rises to savers, it’s a...

SAVERS are missing out on more than £2.7billion a year in interest because banks have failed to pass on two rate rises.

The Bank of England has hiked its base rate twice since November, from 0.25 per cent to 0.75.

This 0.5 percentage point rise should have meant a much-needed boost to savers. But the average easy access savings rate has increased by just 0.13 percentage points in this period, according to exclusive research for Money Mail.

In some cases banks have passed on as little as 0.03 of the total 0.5 percentage point rise. Instead of earning an extra £50 a year on a £10,000 balance, savers get just £3. Some accounts, such as Nationwide’s Instant Access Saver and Direct Saver, have not changed at all. And because banks are under no obligation to tell customers if they are passing on less than the base rate rise, many savers have no idea they are short-changed.

When the Bank of England’s base rate stood at 0.25 per cent before the first rise in November, the average easy access rate on open and closed accounts was 0.37 per cent.

Today, with the base rate at 0.75 per cent, the average interest rate is 0.5 per cent, according to savings advice site Savings Champion. This is an increase of just 0.13 percentage points. With £723billion stashed in these accounts, it means savers are losing out on £2.7 billion in interest.

The average rate on all cash Isas is now 0.68 per cent, up just 0.11 points. Savers currently have £275billion in cash Isas, which means they could miss out on up to £1billion.

At Britain’s biggest building society, Nationwide, its Cashbuilder, e- Savings, Instant Access Saver and Direct Saver account holders will see no rise at all if they save less than £10,000 – earning just 0.1 per cent, the same as before November. Those with more than £10,000 will see a 0.05 point increase. The Co- op Bank Britannia Flexible Saver and Britannia Instant Access accounts have risen just 0.03 points since last November. The Britannia Cash Isa and Select Saver are also up by 0.03 points. The Co- op Bank Cash Isa is up 0.19 points to 0.56 per cent.

Lloyds Banking Group – which includes Halifax – has increased rates by as little as 0.15. The HSBC Flexible Saver is up just 0.14 points. Barclays Instant Cash Isa 1, once a top payer, has risen by a total of 0.2 points for those with less than £30,000.

NatWest has been among the more generous with increases of between 0.19 and 0.35 points.

Anna Bowes, director at website Savings Champion said: ‘For savers it is a lottery.’

Rising inflation has also wiped out any benefits for savers, with the cost of living climbing 2.5 per cent a year.

Banks claim that the base rate is just one factor which affects savings rates.

A spokesman for industry body UK Finance said: ‘Banks have made it easier for customers to shop around.’

‘For savers it is a lottery’