Those who have their money deposited with bigger name banks could be losing hundreds of pounds per year, as the gap between the best savings rates on the market available with smaller banks and those of their high street colleagues continues to grow.
Analysis by Savings Champion shows that there is now more than a one percentage point gap between the best easy-access savings rate available and the best offered by a high street provider.
Currently, the best easy-access savings account – which doesn’t restrict the number of withdrawals you can make – is from Family Building Society and pays 4.35 per cent.
But the best high street bank, Nationwide, pays only 3.3 per cent on its easy-access account.
If you deposited £10,000 in each account, then over the course of a year, you would earn £330 on the Nationwide account and £435 on the Family Building Society account.
Two years ago, in June 2021, the best high street bank paid 0.4 per cent, and the top rate available was only slightly higher at 0.5 per cent, meaning the difference in the interest you would earn over a year was much smaller.
If you deposited £10,000 in each account, there would only be £10 difference in the returns – £50 compared with £40.
Daniel Darragh, research and development manager at Savings Champion, said the data showed that high street banks are “far behind the top rates available from the non-high street providers”.
“This clearly shows, once again, that loyalty simply doesn’t pay, and the best way for savers to boost their interest is to ‘vote with their feet’ and move away from the high street.”
“Provided the new savings provider is covered by the Financial Conduct Authority and protected by Financial Services Protection Scheme (FSCS), your money is just as secure, as long as your savings are within the FSCS limits. With rates reaching levels we haven’t seen in more than a decade, now is the best time to shop around and switch to take advantage of some of these fantastic rates available,” he added.
The analysis comes after big banks have been criticised for not passing on the full extent of successive Bank of England interest rate rises.
An investigation by i last month found that banks raked in £4.8bn in extra profits by not passing on interest rate rises to savers, while increasing mortgages.
Conservative chair of the Treasury select committee Harriet Baldwin said at the time that banks must “do more” for savers.
Earlier this week, the committee wrote to several major banks to ask if they believe all their savings rates provide “fair value “to savers and whether customer inertia is being “exploited”.
Eric Leenders of UK Finance, which represents banks, described the savings market as “very competitive” and said the organisation “would always encourage customers to shop around for the best rate”.
Some high street banks offer higher rates on different accounts, but they require customers to jump through certain hoops to get them.
As an example, HSBC has an Online Bonus Saver account paying a rate of 3.93 per cent, but the rate moves down every month a withdrawal is made.
While, Barclays’ rainy day saver account offers a return of 5.12 per cent, but customers must have a Barclays Blue Rewards account, which accrues a £5 monthly fee, and the leading rate is only up to balances of £5,000.
