Poor value savings accounts subsidising best buys Moneyfacts.co.uk savings survey
Rachel Thrussell, Head of Savings at moneyfacts.co.uk comments:
“The dust has finally settled following the shock quarter point base rate rise in January, with most providers having now adjusted their savings rates. This time many did pass on the full 0.25% increase to their customers, but once again there were accounts that were treated with less generosity.
“Savers should not assume that they will always benefit fully from a base rate increase; indeed research undertaken by Moneyfacts.co.uk from the last three rate hikes certainly backs this up.
“Providers have been selective about the accounts and / or tiers on which they increase rates. Most notably their best buy or core products tend to receive the full rise, whereas their already lower paying account tends to suffer via a smaller increase or in some cases no increase at all. All this is doing is widening the gap between those savvy customers receiving the higher paying, often internet based accounts, and those customers who hold legacy accounts and who for no logical reason have remained loyal to their existing savings account, even though they are in some cases losing money when you factor in the impact of inflation.
“Moneyfacts.co.uk research has found that on average a no notice savings account pays just 3.47%, and a meagre 3.68% on a notice account.
Average gross rate |
||||
|
£1 |
£1K |
£5K |
£10K |
No Notice |
3.271% |
3.291% |
3.607% |
3.706% |
Notice |
3.502% |
3.459% |
3.742% |
4.011% |
Figures correct at 9.2.07 Source www.moneyfacts.co.uk |
||||
“With 25% of accounts paying less than 2.7%the current UK inflation rate, and a massive 54% less than 4.2%, the RPI value, too many savers will see their savings fall in value. But with 20% of accounts offering rates in excess of bank base rate, there is plenty of choice for accounts paying a decent rate of return– so savers have no reason to stay with their poor paying account.
“Banks and building societies will to some extent rely on consumer apathy and as a result they can make money by holding huge sums of customer balances in savings accounts offering poor returns.
“For as long as consumers continue to adopt a lethargic stance to finding themselves an account paying a decent rate, there is no incentive for institutions to treat their savers more fairly. The Moneyfacts message to savers is, stop letting them get away with it and switch providers to obtain the best possible return.
“After all your savings should benefit you as the loyal saver, not be used to increase the profits for the banks and their shareholders.”
NOTES TO EDITORS:
Moneyfacts Group
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