Don’t bank on savings rate help from the main players

SAVERS have been crying out for decent treatment from the big banks ever since the financial crisis, but so far their pleas have been ignored. The high street giants have been paying loyal savers a pitiful 0.01 per cent on instant access for years, which is even harder to justify now the Bank of England has increased base rates twice in quick succession.

The banks have been much faster to lift mortgage rates, with Barclays, Lloyds and Natwest hiking their standard variable rates (SVRS) after the December increase, as did Halifax, Nationwide, Santander, Virgin Money,tsb and others.

After the BOE hiked rates to 0.5 per cent on February 3, Nationwide and Santander increased their SVRS again, to 3.99 per cent and 4.74 per cent respectively.

Savers, many of them older people on fixed incomes, desperately need some kind of return on their money as the cost of living rages out of control. So will the banks take heed?

RATE WE’RE IN

We contacted Lloyds, who told us that its “savings rates remain under review”.

Barclays is also reviewing its savings rates, but pointed out that it increased rates on its Blue Rewards Saver by 0.1 per cent to 0.25 per cent, after the December BOE hike. It also increased rates on its instant cash Isa, which now pays from 0.05 per cent.

Natwest is reviewing rates, too, and added: “Our Digital Regular Saver offers one of the highest rates in the market at 3 per cent to encourage the savings habit.”

On Friday, HSBC finally took concrete action, increasing interest rates on all its variable rate savings accounts, so that its instant access accounts now pay 0.10 per cent, up from a vanishingly small 0.01 per cent before.

The Lloyds Easy Saver, Barclays Everyday Saver and Natwest Instant Saver deposit accounts continue to pay 0.01 per cent.

By contrast, mortgage SVRS are high and rising. Barclays charges 4.74 per cent and HSBC 3.79 per cent, while the Lloyds Bank homeowner variable rate and the Natwest SVR are both 3.74 per cent.

HIGH SOCIETY

Among the bigger names,tesco Bank stands out for passing on the full December 0.15 per cent base rate increase, Savingschampion.co.uk founder Anna Bowes said. “Most of the others to increase rates were building societies, including Skipton, Principality, Newcastle, Suffolk, Stafford Railway, Bath, Swansea, Bucks and Yorkshire.”

Bowes said the failure to hike rates is “outright daylight robbery” and urged savers to remove their money from the high street banks. “The banks have not given us an inkling of what they intend to do, but they already pay the worst rates and that’s unlikely to change. Choose a provider who is willing to woo you.”

James Daley, managing director of Fairer Finance, which campaigns for higher financial services standards, says: “Sadly this kind of chicanery has been common place in the banking sector for years.”

Whenever interest rates have risen, banks have been slow to pass on the benefits to savers, and quick to pass the extra cost on to borrowers. He said: “When rates fall, savers often feel the blow much quicker.”

Daley said it’s galling for savers after so many years of low rates, and called for the banks to reward their patient savers: “They’ve been paid a pittance for over a decade.”

CALCULATED INSULT

Sarah Coles, Hargreaves Lansdown’s personal finance analyst, said this “stubborn refusal to budge on savings rates feels like an insult to savers who have waited more than a decade for better deals”.

The Government has pushed cheap money in their direction, so the big banks do not need to reward savers for their deposits. “Instead, they are choosing to make more money from the gap between what they charge on borrowing and pay on savings.”

Instead of 0.01 per cent, you can get 70 times as much from “challenger” bank Cynergy, which pays 0.71 per cent with instant access.

Aldermore pays 0.75 per cent, provided you do not make more than two cash withdrawals in a year.

If you can lock your money away for five years you can get 2.2 per cent from Monument Bank and 2.1 per cent via savings platform Raisin, but Coles said. “That is still well below today’s 5.4 per cent inflation rate.”

‘Despite getting

taxpayer assistance

when they needed it, they

serve up poor savings deals’

TIME TO MOVE

The banks do not deserve your loyalty, said Andrew Hagger, savings expert at Moneycomms.co.uk: “Despite getting taxpayer assistance when they needed it, they continue to serve up poor savings deals.”

The outlook remains grim. “More base rate rises are forecast during 2022 but don’t expect the high street banks to pass on the full benefit to savers. It just doesn’t happen.”

Hagger urged savers to vote with their feet and check out some of the more competitive challengers such as Shawbrook,aldermore, Castle Trust, Paragon Bank and Charter Savings Bank.

“They are always featuring in or close to the best-buy rates and your first £85,000 is protected under the Financial Services Compensation Scheme in exactly the same way.”