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The bank that will not pass on rate increases unless you call and ask:

Today, Money Mail reveals the series of tricks greedy banks use to avoid passing interest rate hikes on to savers.

In the worst case, one savings account provider, Sainsbury’s Bank, will not increase the rate on its ‘variable’ Isa unless customers explicitly request it.

Buried in the terms and conditions of its 2.85 per cent variable rate cash Isa, Sainsbury’s warns that “interest will not automatically change to match the new rates”.

Containment: In just over a year, the Bank of England base rate has risen from a paltry 0.1% or 4%. But some banks have failed to raise rates on hundreds of their products.

That means anyone who opened the account before last April was left languishing with a rate of just 0.7 percent, even though the higher rate is now advertised to new clients on the website.

The bank confirmed that customers who call or contact its online chat service can increase their rate to 2.85 percent.

Money Mail investigations found that other banks are also guilty of leaving customers in bad-paying accounts while flaunting the best deals to attract new customers.

In just over a year, the Bank of England’s base rate has risen from a paltry 0.1 percent to 4 percent.

That should have given long-suffering savers a big boost. They had seen yields squeezed to the bone when the base rate fell in the aftermath of the 2008 financial crisis, and they rightly expected a turnaround.

But the damning analysis of Money Mail by rate-monitoring experts Savings Champion found that some banks have failed to raise rates at all on hundreds of their products.

For example, Virgin Money has left rates on 343 accounts unchanged for at least a year, even as the base rate has skyrocketed.

The rate on your Easy Access E-Saver and Easy Access account has stayed at a minimum of 0.25 percent all that time. This low rate now applies to 34 different editions of E-Saver and 38 editions of the branch-based Easy Access account.

Virgin Money has also moved customers from other old savings offers to these zombie accounts.

Customers who had previous problems with their defined access E-Saver account switched to the 0.25 percent Easy Access E-Saver Number 32. However, the bank offers new customers 2.25 percent on their last Account Issue: The Defined Access E-Saver -Saving Edition 17.

Santander launched eSaver Issue 20 last July paying 0.75 percent. In November, it launched eSaver Issue 21 paying 1.5 percent, but it didn’t increase the rate for customers who took out the old Issue 20 just four months earlier.

In other cases, the Savings Champion analysis found that banks, including AA and Allied Irish Bank, still pay just 0.01 percent on some accounts.

Just weeks ago, the heads of Barclays, HSBC, Lloyds and NatWest were brought before MPs in the Treasury select committee for an interrogation on why they have been slow to raise savings rates but quick to raise the costs of mortgages and loans.

Lost: Sainsbury's Bank announces 2.85% interest on its Isa cash variable rate for new customers.  However, those who opened it before last April had a rate well below 0.7%.

Lost: Sainsbury’s Bank announces 2.85% interest on its Isa cash variable rate for new customers. However, those who opened it before last April had a rate well below 0.7%.

The figures show that the big four banks’ collection of net interest margins — the gap between what they charge borrowers and what they pay savers — rose between 13 and 23 percent last year.

The five largest banks made £39.9bn from this gap last year, an increase of £7bn.

Anna Bowes of Savings Champion says: ‘People look in the window at what’s on sale and think they’re winning the highest rate. But in many cases they are being cheated with a lower rate.’

James Dover, 82, of Liverpool, is among those who have been earning Sainsbury’s 0.7 per cent Variable Rate Cash Isa even though the general rate has been increased to 2.85 per cent.

I expected the rate to go up automatically since the account name said it was ‘variable’. However, when he phoned last week, he was told his interest rate hadn’t changed since Sainsbury’s started raising the rate for new savers last July.

The difference in annual interest on £20,000, the most you can pay in an Isa each year, between a rate of 0.7 per cent and 2.85 per cent is £430.

After his phone call, Sainsbury’s promptly raised the rate to 2.85 per cent. The company confirmed to Money Mail that Cash Isa customers should contact it by phone or secure online message to raise interest.

Says James: ‘I thought the onus was on the bank to tell people about rate changes. Many like me get stuck on the lower rate without realizing it. It is unfair.’

Loss of earnings: the difference in annual interest on £20,000, the most you can pay in an Isa each year, between a rate of 0.7% and 2.85% is £430

Loss of earnings: the difference in annual interest on £20,000, the most you can pay in an Isa each year, between a rate of 0.7% and 2.85% is £430

On the non-Isa version of this account, Defined Access Saver, you must open a new account online or by phone to take advantage of the new rate. It means existing customers get a rate as low as 0.9 percent compared to the 3.05 percent offered to new savers.

Other sneaky tricks include savings providers not having issue numbers on their accounts; instead, the rate earned depends on when the account was opened.

Tesco Internet Saver has a general rate of 2.9 per cent which includes a rebate of 2.2 percentage points per year. But your bonus could be much less depending on when you opened the account. A year ago, it was only 0.25 points.

Since then, it has offered 17 different bonus rates between 0.4 points and the current 2.2 points. Once you’ve been in the account for one year, you’ll get the standard rate of 0.7 percent.

Last week, Halifax and Lloyds moved their rates after increasing the base rate by 0.5 percentage point in early February.

But they passed in only a tenth of the climb. Halifax now pays 0.7 per cent on balances up to £10,000 in its Everyday Saver and 0.8 per cent on balances up to £50,000.

At Lloyds, you earn 0.65 per cent up to £25,000 in the account. Barclays Everyday Saver is stuck at 0.55 percent.

NatWest Flexible Saver pays 0.65 percent on balances up to £25,000, while top of the bunch is HSBC Flexible Saver, which rises to 1.3 percent tomorrow from 0.9 percent.

An easy way to avoid cheating is to open an account that pays the same rate to all savers. These include the internet-based Ford Money Flexible Saver and Investec Online Saver, both at 2.9 percent and the app-based Zopa Bank Instant Saver at 3.07 percent. NS&I Direct Saver, available by phone or online, pays a competitive 2.85 percent.

Skipton BS Base Rate Tracker Issue 4, available by phone, online or through branches, pays 2.9 per cent. It guarantees that the rate will move in line with the base rate for two years.


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