Why the big high street banks cost you £318 in interest last year

Savers who stuck with the big banks last year will have lost out on £318 in interest on their money, analysis has shown.

Through the savings boom of 2023, during which one-year fixes rocketed to more than 6pc, the rates offered by high street banks trailed behind those advertised by smaller challenger banks.

The Telegraph Money analysis found that on the first working day of every month last year, the rates offered by the big banks on one-year fixes for pots of more than £ 5,000 were eclipsed by smaller lenders.

For those with pots of £60,000, putting £5,000 into a one-year fix on the first day of every month, following the top rates, rather than sticking with the big names, would have seen them earn more.

Saving £5,000 each month into the top one-year fixed rate available would have netted a saver £3,270 in interest.

But if that monthly £5,000 had been left with the big banks, it would have generated only £2,946 in interest, once all the fixes had paid out.

With rounding, a saver would be 11pc better off chasing the top rates.

The analysis excludes cash Isas, such as Santander’s 5.6pc offer which it launched on Sept 18 because savers can only open one cash Isa each tax year.

It considered rates offered by Lloyds, RBS, HSBC, Barclays, Santander, Nationwide, Natwest, TSB and Metro as those offered by the “big banks”.

The biggest gap was in June, when Natwest’s one-year offering stood at 4.2pc, as opposed to Tandem’s 5.15pc, according to data provided by financial analysts Moneyfacts.

The nearly one percentage point difference would equate to almost £500 over the course of the one-year bond on monthly savings of £5,000.

The best rate offered all year on a one-year fix was from National Savings & Investments (NS&I), which launched a 6.2pc rate in August, before pulling it just six weeks later after 225,000 signed up.

The Financial Conduct Authority ( FCA) warned the big high- street banks in July last year that they needed to get their act together and pass on rate rises to savers.

Jeremy Hunt, the Chancellor, also waded into the row, telling the banks last June that they were taking “too long” to increase their rates.

The Bank Rate hit 5.25pc in August 2023, after 14 consecutive rises from December 2021, and has been held there ever since.

A HSBC spokesman said it continued to support customers and offer “overall value” on savings accounts.

The spokesman said: “We have designed our savings accounts to make it easy to build and maintain a savings habit.”

A Santander spokesman said: “We delivered strong value for our savings customers last year, which included competitive savings rates for our ISAs and easy access products.”

An FCA spokesman said: “We continue to look closely at the value firms provide to savings customers. We have seen a more competitive market emerging, with the rates available improving significantly.”