The Bank of England has raised base rates twice in a row, but the big high street banks are still paying savers as little as 0.01%. Experts urge savers to find a better deal today.
After the Bank of England raised rates to 0.25% in December, Barclays, Lloyds and NatWest, Halifax, Nationwide, Santander, Virgin Money, TSB and others quickly raised their mortgage rates.
Yet their savings rates barely budged, even though the BoE raised rates again on Feb. 3 to 0.5%.
Lloyds Easy Saver, Barclays Everyday Saver and NatWest Instant Saver deposit accounts continue to pay 0.01%.
On Friday, HSBC finally acted by raising interest rates on all of its variable rate savings accounts. The rate of its instant access accounts has been reduced from 0.01% to 0.10%.
However, savers can turn to smaller “challenge banks” considerably more.
The Express has contacted Lloyds to ask when it will pay savers more, which only said its “savings rates remain under review”. Barclays also said it was revising rates, but pointed out that it had raised the yield of its Blue Rewards Saver by 0.1. to 0.25%, after the BoE’s hike in December.
Barclays has also raised rates on its Instant Money Isa, which now pays 0.05% on balances below £30,000.
NatWest is also reviewing its savings rates and added, “Our Digital Regular Saver offers one of the highest rates on the market at 3% to encourage the saving habit.”
Among the biggest names, only Tesco Bank stands out for passing on the full 0.15% base rate hike in December, said Anna Bowes, founder of SavingsChampion.co.uk. “Most of the others to raise fares were building societies including Skipton, Principality, Newcastle, Suffolk, Stafford Railway, Bath, Swansea, Bucks and Yorkshire.”
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Bowes called the failed rate hike “theft from daylight” and urged savers to pull their money out of the big banks. “They are paying the worst rates and that is unlikely to change. Choose a supplier who is ready to seduce you.
James Daley, chief executive of Fairer Finance, which campaigns for better financial services, says “unfortunately this kind of quibbling has been commonplace for years.”
Banks are slow to pass on higher rates to savers, but quickly pass the extra cost on to borrowers, he said.
Daley said it’s particularly infuriating for savers who have been “paid a pittance for over a decade”.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said “this stubborn refusal to budge on savings rates feels like an insult to savers who have waited over a decade for better deals.”
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Instead of 0.01%, you can get 70 times more from “challenger” bank Cynergy, which pays a floating rate of 0.71% with instant access, Coles said. This is reinforced by a temporary bonus of 0.41% which lasts for 12 months.
Another challenger bank, Aldermore, pays a variable 0.70%, with 120 days notice to get your money.
If you can lock in your money for five years, you can get 2.20% from Monument Bank and 2.10% through the savings platform Raisin, Coles said. “That’s still well below the current inflation rate of 5.4%.”
The big banks don’t deserve your loyalty, said Andrew Hagger, savings expert at MoneyComms.co.uk. “Despite taxpayers’ help when they needed it, they continue to offer bad savings deals.”
Hagger urged savers to vote with their feet and check out some of the more competitive challengers such as Shawbrook, Aldermore, Castle Trust, Paragon Bank and Charter Savings Bank.
“They are still at or near the best buy rates and your first £85,000 is protected by the Financial Services Compensation Scheme in exactly the same way.”
Ultimately, banks rely on your apathy, Hagger said. “Until customers start switching en masse, nothing will change.”