Savers with money in easily accessible accounts run by High Street banks should continue to look elsewhere for better interest rates.
This is despite some of the banks responding to recent criticism from politicians and the regulator by claiming that they are raising rates on these accounts.
Savers hold £860bn in easily accessible accounts, representing around two-thirds of all money saved in banks. But the deals are universally bad.
Banks are currently paying just over 1 percent interest. This is less than half the average easy-to-access rate of 2.49% paid on these accounts across the market, according to financial data scrutineer Moneyfacts.
It’s also a quarter of the interest you could earn by searching for an easily accessible best-buy account.
Rock bottom interest rates: Savers hold £86bn in easily accessible accounts, representing roughly two-thirds of all money saved in banks. But the deals are universally bad.
For example, Shawbrook Bank pays 4.35 percent interest.
Savers in some easily accessible accounts at High Street Bank have to wait until tomorrow for a week for their rates to rise, and even then they can earn just 1.1 per cent.
Lloyds, the owner of Halifax and Bank of Scotland, offers Halifax Everyday Saver and Bank of Scotland Access Saver easy access accounts.
Starting the week of Thursday, you’ll pay 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 further.
This will mean that for these two accounts, Lloyds has passed through just a third of the rate increases – 0.55 percentage points of the 1.5 per cent rate increase since January.
Savers at Lloyds Easy Saver are also getting a rum deal. The rate on balances up to £25,000 will move to 1.1 per cent, an increase of just 0.6 points so far this year. The rate rises to just 1.35 per cent on sums between £25,000 and £100,000 and 1.8 per cent above that level.
NatWest’s rates are increased from tomorrow, but you’ll still pay as little as 1.4 per cent on your Flexible Saver and Instant Saver accounts on 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 per cent.
Barclays raised the rate on its Everyday Saver earlier this month to 1 percent. Santander’s Daily Savings and Instant Savings pay a paltry 0.85%, after having passed on just 0.4 points of the increase in the base rate.
HSBC is the best of a bad bunch paying 1.75 per cent on £1 or more into its Flexible Saver account.
Plus, if you have a checking account at the bank, you can earn 4 per cent of up to £50,000 in your online Bonus Saver, but only if you don’t touch your money. In any month you make a withdrawal, the rate drops to 1.75 percent.
The weak increases will do little to calm the anger of those who believe that banks should pay better savings rates.
Six days ago, the Financial Conduct Authority called the CEOs of the big banks and asked what they were doing to give savers a fairer deal.
That followed pressure from the Treasury Select Committee. Harriett Baldwin MP, chair of the committee, said: “With interest rates rising and our constituents feeling pressured by rising prices, it is only fair that the UK’s biggest banks raise their paltry easy-access savings rates.” . The time for action is now.’
The big five banks posted combined profits of more than £5bn in the first quarter of this year.
However, some new fixed rate accounts are more competitive. Halifax, Lloyds Bank and Bank of Scotland will launch new fixed rate Isas today.
In 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 the Lloyds and Bank of Scotland fixed rate Isas are 5.45 per cent and 5.5 per cent.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.