Last Thursday, the Bank of England hiked base rates for the third month in a row to 0.75 percent, but the big banks still refuse to increase their savings rates. Yet many were quick to hike rates on mortgages, credit cards and personal loans.
The big high street banks “need to stop pussyfooting around” and start treating their savings customers better, says Anna Bowes, founder of savings tracking service SavingsChampion.
“Incredibly, Halifax, Lloyds, NatWest, Bank of Scotland and Santander are still paying 0.01 percent on their easy access accounts.”
Bowes said savers have suffered long enough. “It’s a disgrace that they are being ignored at a time when they need all they help they can get to combat rising inflation.”
So far, less than one in 40 accounts have matched the BoE’s three successive base rate increases and the situation is getting worse rather than better.
Bowes added. “The last time base rate was at 0.75 percent, in March 2020, easy access accounts paid up to 1.60 percent. Today, Cynergy Bank’s best buy rate is roughly half that at 0.84 percent. “
Unless savers move their money from banks who refuse to play fair, the situation won’t improve, Bowes said. “Hoarding cash in accounts paying 0.01 percent is playing into the hands of unscrupulous banks.”
Savers hold an incredible £ 250 billion in savings accounts that are paying ZERO interest.
Those currently getting just 0.01 percent could get up to 84 times more interest by switching to Cynergy’s best buy easy access account.
Those who are willing to lock their money away in a fixed-rate bond could get up to 160 times more. “Currently, the best one-year bond is with Al Rayan Bank, paying 1.61 percent,” Bowes said.
While these so-called “challenger banks” may be unfamiliar to most people, savers get full protection under the Financial Services Compensation Scheme, which guarantees up to £ 85,000 should the bank collapse.
READ MORE: Top savings accounts offering up to 2.3 percent interest
On Thursday, Yorkshire Building Society announced it would hike all of its savings accounts by 0.25 percent, in line with base rate.
From April 12, it will pay at least 0.85 percent on easy access. That is 85 times the return from the big banks.
Yet even some challenger banks proved reluctant to pass on the full base rate rise, for example, Aldermore only increased the rate on its one-year fixed-rate bond by 0.1 percent, to 1.45 percent.
Its three-year fixed rate increased by just 0.03 percent to 1.88 percent.
Once again, savers are being forced to be patient, said Myron Jobson, senior personal finance analyst at Interactive Investor.
“It could take a few months before consumers experience an uplift in savings rates – if at all.”
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By contrast, Lloyds and Santander were swift to hike mortgage rates by 0.25 percent on Thursday, and plenty more banks will follow suit, costing homeowners dear.
The average mortgage holder now pays almost £ 1,000 a year more following these three base rate hikes, online mortgage broker Trussle calculates.
Head of mortgage operations Amanda Aumonier said remortgaging can save homeowners £ 3,900 a year on average, and taking out a five-year fix today may be a wise move, as this will protect against further base rate hikes.
The days of the sub-1 percent mortgage have been consigned to the history books but there are still cheap deals out there, she said. “Today’s best five-year fix at 80 percent loan-to-value is currently 1.72 percent with NatWest. This falls to 1.32 percent with Barclays if homeowners have an LTV of just 60 percent. “
The average credit card APR has now jumped to a staggering 26.3 percent, both for new and existing customers, according to Moneyfacts.
Once again, it’s the banks who benefit, not their customers