Loyal savers hit by zero interest rate rip-off

HIGH street banks are failing to pay loyal customers interest on their savings, City watchdogs have revealed, as they announced plans to send warning texts to those being ripped off.

Some of Britain’s best-known banks including HSBC, the Post Office and First Direct are offering savings accounts with rates as low as zero for some customers.

The worst rates are paid to those whose accounts are no longer open to new business, which masks the dismal interest paid.

Savings experts have previously said that a barrier to savings rates falling to zero was that no bank would want to be the first to make the move, for fear of losing customers. But fears are mounting more banks will now introduce zero interest if the Bank of England cuts rates.

The Bank rate is expected to 0.25 per cent next month after seven years of it being held at 0.5 per cent. Bank rate strongly influences the level of interest banks pass on to their customers.

In its latest “Sunlight Remedy” report, the Financial Conduct Authority (FCA) named 32 of the lowest paying savings institutions. It found more savers than ever are earning nothing or next-to-nothing in “easy access” accounts.

The FCA signalled plans to introduce text and email alerts to nudge savers when they are being ripped off.