Loyalty costs savers, as banks questioned on rates

Some of the UK’s biggest banks are still paying less than 1% on their easy access deals.

In a series of letters released at the beginning of this month, the Treasury Committee criticised some of the UK’s high-street banks. Part of these letters questioned why some of their easy access rates remain low, especially when the Bank of England’s Base rate sits at 4%.

According to Moneyfactscompare.co.uk analysis, Barclays Bank, Bank of Scotland, HSBC, Halifax, Lloyds Bank, NatWest, Royal Bank of Scotland, Santander and TSB all have easy access accounts paying less than 1%.

By contrast, there are several challenger banks and building societies which offer more than 3% on their easy access deals.

The Treasury Committee is expecting responses from Barclays Bank, HSBC, Lloyds Banking Group and NatWest Group this week.

It will be interesting to see the responses, which are anticipated this week, particularly when challenger banks and building societies are increasing rates.

Convenience is costing savers who keep their cash stashed in an easy access account with a big high street bank.

As the Bank of England base rate has risen all the way up to 4%, it is evident loyal savers haven’t seen the full benefits passed on to them.

Savers who compare the top easy access rates will find they currently pay 3% or more, and every brand has the same protections in place as the big bank brands do, being covered by the Financial Services Compensation Scheme (FSCS).

However, every institution can have its own reasons and margins in place that leads it to assess its savings rates.

Challenger banks and building societies may well prioritise offering a fair deal compared to the wider market and adjust their rates to cope with demand or other market influences. Mutuals may be worth considering, not just for their savings rates, but also for their principles and the support of local communities and charities.

It will be down to savers to compare the rates on offer and move their money, so it is wise to review any accounts often and not presume they will see their rate rise in line with base rate.