Big Banks Punish Loyal Savings Customers With Abysmal Interest Rates

By: MoneyFacts

Savers who turn to the most familiar banks* to hunt for a good savings deal may feel it’s a logical place to start, but they may want to think twice. If savers are looking for a top rate on an easy access account, then they are likely to be disappointed if they ignore the less familiar brands.

In fact, according to the latest moneyfacts.co.uk research, the difference between the best easy access account on the market versus the worst big bank rate would cost savers £250 a year in interest (based on a £20,000 initial deposit). As rates continue to improve away from the biggest banks*, it may be a good time for savers to reconsider more unfamiliar brands to get the best possible return.

Rachel Springall, Finance Expert at moneyfacts.co.uk, said:

“Despite a positive change in the savings market over the past six months, the biggest high street banks have refrained from offering competitive deals and fall far short of the Best Buys. In fact, every easy access account from the big banks pays less than the base rate, at 0.50%.

“Savers are paying for the convenience of keeping their cash with their main bank, rather than chasing down the best possible deal for flexible access to their savings. HSBC currently pay 0.05% on an easy access account, which would earn just £10 a year in interest on a £20,000 deposit. It remains to be the case that the more unfamiliar brands, such as challenger banks, are fighting for savers’ attention by offering some decent deals. In comparison to HSBC’s account, RCI Bank UK would return £260 on the same deposit.

“Consumers may well be pinning their hopes of a base rate rise in May, but their wishes might not be fulfilled thanks to economic fluctuations. Even so, as we have seen in November, there is no guarantee that every savings provider will pass on a rate rise. In fact, some of the biggest banks were very selective about which accounts got the full 0.25% rise in November. HSBC increased their standard flexible saver, which paid 0.01%, by a measly 0.04% after the base rate rise.

“As the savings market continues to improve away from the big banks, it’s more important than ever for consumers to be on the lookout for a better rate, and more importantly, switch if they are getting a raw deal.”

*Banks selected for comparison are considered the biggest on the high street. This comparison looked at Bank of Scotland, Barclays Bank, Halifax, HSBC, Lloyds Bank, NatWest, Royal Bank of Scotland, Santander and TSB. Deals shown are a selection of the lowest rates.

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