Savers with money in easily accessible High Street bank accounts should continue to look elsewhere for better interest rates.
This is despite the fact that some banks have responded to recent criticism from politicians and the regulator by stating that they are raising rates on these accounts.
Savers have £860bn in easily accessible accounts, representing around two-thirds of all money saved at banks. But the deals are universally bad.
The banks currently pay barely more than 1 percent interest. This is less than half the average rate of 2.49 percent paid on these accounts across the market, according to financial data controller Moneyfacts.
It’s also a quarter of the interest you could earn shopping around for a best-buy easy-access account.
Lowest rates: savers have £86bn in easy access accounts, representing about two-thirds of all money saved at banks. But the deals are universally bad
For example, Shawbrook Bank pays 4.35 percent interest.
Depositors in some easily accessible High Street bank accounts will have to wait a week until tomorrow for their rates to rise – and even then they might only earn 1.1 per cent.
Lloyds, owner of both Halifax and Bank of Scotland, offers easily accessible accounts Halifax Everyday Saver and Bank of Scotland Access Saver.
From Thursday week it pays 1.15 per cent on balances up to £10,000, 1.25 per cent if you have between £10,000 and £49,999 in your account and 1.65 per cent on £50,000 or more.
This means that for these two accounts, Lloyds passed on only a third of the rate hikes – 0.55 percentage point of the 1.5 percent rate hike since January.
Savers at Lloyds Easy Saver also get a rum deal. The rate on credits up to £25,000 goes to 1.1 per cent, up from just 0.6 points so far this year. The rate rises to just 1.35 per cent on amounts between £25,000 and £100,000 and 1.8 per cent above that level.
NatWest rates are rising from tomorrow, but it still pays just 1.4 per cent on its Flexible Saver and Instant Saver accounts for amounts up to £25,000 – an extra 0.9 points this year so far. Even if you have £250,000 in your account, your rate is only 3.1 percent.
Barclays raised the interest rate on its Everyday Saver to 1 percent earlier this month. Santander’s Everyday Saver and Instant Saver pay a paltry 0.85 percent, having passed on just 0.4 point of the base rate hike.
HSBC is the best of the bad bunch, paying 1.75 per cent on £1 or more in its Flexible Saver account.
Plus, if you have a checking account with the bank, you can earn 4 per cent on up to £50,000 in the online Bonus Saver – but only if you don’t touch your money. In every month that you withdraw money, the rate drops to 1.75 percent.
The weak increases will do little to quell the anger of those who think banks should pay better savings rates.
Six days ago, the CEOs of the major banks were called in by the Financial Conduct Authority and asked what they were doing to give savers a fairer deal.
That followed pressure from the Treasury Select Committee. Harriett Baldwin MP, the committee’s chairman, said: ‘With interest rates rising and our constituents feeling pressured by rising prices, it’s only right that the UK’s biggest banks raise their measly, easily accessible savings rates. It’s time for action now.’
The big five banks posted a combined profit of more than £5 billion in the first quarter of this year.
However, some new fixed rate accounts are more competitive. Halifax, Lloyds Bank and Bank of Scotland are launching new fixed rate ISAs today.
At Halifax, the tax-free rate is 5.3 percent for a one-year fixed-rate bond — 5.35 percent for two years. The respective rates for fixed rate Isas from Lloyds and Bank of Scotland are 5.45 per cent and 5.5 per cent.
Sy.morris@dailymail.co.uk
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