Will the big banks EVER help savers?
By Sylvia Morris
BiG banks are still punishing savers with paltry interest rates a year after the City watchdog vowed to clamp down on the loyalty rip-off.
Loyal savers who have left their cash languishing in easy-access accounts for long periods of time could now be earning as little as 0.1 pc.
By comparison, those who shop around with newer and smaller names can get a rate of up to 1.5 pc.
Loyal savers can miss out because providers often offer a complex variety of accounts. each year, they bring out a new version of the account and quietly cut back the rate on the old one in the hope that savers don’t notice.
and it’s the biggest High Street names that typically pay the worst rates, which means opting for a savings deal with your current account provider could prove a costly mistake.
Despite this, in the 12 months to May, savers ploughed £18billion into easy-access accounts run by the big banking groups: Barclays, HSBC, Lloyds Banking Group (which includes Halifax and Bank of Scotland), RBS (including NatWest), Santander, TSB and Virgin Money. They now hold £655 billion in easy-access accounts.
RaCHeL SpRiNGaLL, finance expert at data analysts Moneyfacts, says: ‘There is a huge difference in the interest rates offered to consumers across the most familiar brands.
‘Some savers may feel comfortable leaving their cash in an easy-access account linked to their current account, but this convenience is costing them dearly.’ The grim reading comes
a year after a report by industry watchdog the Financial Conduct authority raised concerns about a lack of competition in the cash savings market — particularly in cases where customers have remained loyal to the same big provider for a long time.
it found two-thirds of consumers have a savings account with their main current account provider, even though they typically offer lower rates.
and fewer than one in ten (9 pc) had switched providers in the previous three years, despite earning a pittance.
To partially right this wrong, the regulator is consulting on plans to introduce a basic savings rate that would apply to all easy-access accounts after they had been open for a set period.
However, 12 months on, there has been no progress as far as savers are concerned.
Royal Bank of Scotland (RBS) offers no fewer than nine easyaccess accounts, Moneyfacts research shows, and their rates vary widely, from 0.2 pc to 1.25 pc.
The top rate goes to savers in its subsidiary Ulster Bank with a private Reserve Savings account. Meanwhile, those in NatWest instant Saver earn just 0.2pc on balances up to £25,000 and 0.3pc up to £1 million.
HSBC has 11 different easyaccess accounts paying between 0.1pc and 0.65pc. at 0.1pc, you will see just £1 interest a year on each £1,000 of savings. if you earned the average 0.58pc rate paid on easy-access accounts, you would boost your return to £5.80 per £1,000.
But savers can earn around double this by picking a toppaying account from the 350 currently on the market. For those who are online, Shawbrook Bank offers a top rate at 1.48 pc.
This is just behind the best rate of 1.5pc on offer from Marcus by Goldman Sachs, Virgin Money Double Take e-Saver and Cynergy Bank’s easy access account.
However, these latter three accounts come with catches. This means that, in order to earn the extra 0.02 points a year, you need to restrict the number of withdrawals you make from your account or be ready to switch again in a year when the bonus runs out.
Marcus has a 0.15 percentage point bonus payable for 12 months built into the rate, after which it drops to 1.35 pc.
The Virgin Money account has no bonus, but you can only take money out of it twice a year.
With the Cynergy account, the bonus is 0.75 points for the first year only, after which the rate halves.
Ford Money offers a slightly lower 1.42 pc, but promises not to discriminate between new and existing savers — they will all earn the same rate in its easy-access Flexible Saver.
You can also do much better with smaller banks and building societies with branches dotted around the country.
The best include Kent Reliance easy access at 1.3 pc, Newcastle BS Community Saver at 1.16pc, Family BS Branch Saver at 1.21 pc and Coventry BS easy access at 1.05 pc.