Savers earning paltry 10p a month as high street banks fail to pass on rate rise benefits

THE average saver is earning just 10p a month in interest by staying loyal to high street banks, after providers failed to pass on the benefit of Bank Rate rises.

Many of Britain’s biggest banks are still offering paltry 0.01 per cent interest rates on easy-access accounts. The average amount held in such accounts is £11,696, according to Paragon, a bank. This would earn £1.17 in interest over a year, or roughly 10p a month.

Some 18 savings providers offer 0.01 per cent easy-access deals, including Barclays, Halifax, Lloyds, Natwest, RBS and Santander, said Moneyfacts, an analyst. This is despite the Bank of England raising the Bank Rate twice in recent months, from 0.1 to 0.5 per cent.

Across the market, the average easyaccess deal offers 0.21 per cent interest. On £11,696, this would earn savers an extra £23.39 a year. If banks passed on the full 0.4 percentage point Bank Rate rise since December, these accounts would earn £46.78 a year on £11,696.

Around £880billion is languishing in easy-access accounts, according to UK Finance, the banking trade body.

None of these deals beats inflation. If you put £11,696 in the best-paying account – from Aldermore, which offers 0.75 per cent – it would lose £549 of its purchasing power over a year at December’s rate of inflation. Last week the Bank of England forecast that inflation would reach 7.25 per cent in April.

Overall, fewer than one fifth of banks have raised savings rates since December. Most of those that did have not passed on the 0.15 percentage point increase in full.

Savings deals from Lloyds, Natwest and Santander have not climbed, said Savings Champion, an analyst. Niche tracker products contractually obliged to pass on any change have done so, however. Barclays and Natwest said they were reviewing their savings rates.

National Savings & Investments, the Government-backed bank, increased the rate on its Direct Saver account and Income Bonds to 0.5 per cent this week.

Nationwide, the building society, has also put up rates by as much as 0.5 percentage points on some deals.

Anna Bowes, of Savings Champion, said: “It’s time to vote with your feet and move your cash elsewhere, as leaving it with the banks paying their paltry rates is simply playing into their hands.”