Nine out of the 10 major banks and building societies continue to pay less than 0.5% in savers’ interest.
High street banks failed to disclose the Bank of England’s recent interest rise to millions of savers. This left their customers with rates as low as 0.01pc.
After a 0.5 percentage points increase in base rate two weeks back, the country’s largest 10 banks have not raised rates on their easy-access savings accounts. This is the highest rise in 27 years.
Last night, MPs criticized the banks and demanded that struggling savers be paid a fair amount of their money.
According to an analysis by Moneyfacts for The Telegraph, the Bank of England raised rates to 1.75pc earlier in the month. However, nine of the 10 major banks and building societies still pay savings interest of less than 0.5%, according to data firm Moneyfacts.
Barclays is the worst offender with its Everyday Saver Account, which still pays 0.01pc for balances below £50,000. This means that a saver would only get £1 per year on a £10,000 deposit.
Although the bank stated that it would increase its rate next month by 0.15%, it did not do so.
This is because inflation is expected to rise to 13pc in the coming year. Cash savings are rapidly losing value.
Chairman of the Treasury select committee, Mel Stride said that banks may not be playing fair. He stated that inflation is destroying people’s savings and it is important to get the highest return on them.
“It is therefore disappointing that banks are not rising to the challenge. This is something that the Committee might want to consider.”
At the beginning of the pandemic, the Bank Rate fell to a record low of 0.1pc. Banks were quick to reduce rates on easy-access savings accounts to the minimum.
Since December, six times in succession have seen the Bank of England raise rates.
Banks have been quick to pass rate increases to mortgage borrowers. The average standard variable mortgage rate rose from 4.4pc in 2013 to 5.17pc in 2014.
The gap between savings rates and mortgage rates has been growing for the past 15 years. Andrew Bailey, the Governor of the Bank of England, stated that he is “watching closely” to ensure banks do not pass on any increases.
Santander’s Everyday Saver accounts pay 0.1pc while Nationwide’s Instant Access Saver earns 0.18pc. Royal Bank of Scotland and Lloyds Bank are all 0.2pc. The smaller banks have been forced to increase rates for savers with the market’s average easy access rate at 0.7pc. Rates above 1.5pc are the highest available rates.
Kevin Hollinrake Tory MP and chairman of the cross-party panel on fair business banking said that the Financial Conduct Authority, the City watchdog, should do “as many as it can” in order to make sure savers get their money’s worth.
He stated, “Simply taking the cash and making a profit from a situation where you’re seeing many people who are in very difficult circumstances is completely wrong. It can in no way be understood as treating their customers fair.”
Harriett Baldwin is a Conservative member on the Treasury Select Committee. She stated: “We need a competitive banking sector in Britain and that requires us, as consumers, to shop around in order to find the best savings rates in much the same way we shop around at petrol stations for the best prices.”
Laura Suter, from AJ Bell’s investment platform, stated that most consumers could save more money by switching to less-known banks. These banks are “hungry” for new business.
She stated that there has been a rate war in the savings market ever since the Bank Rate began rising, but the high street banks have not been able to match it. Instead, they prefer to bank on people’s apathy and pretend that they won’t move their savings elsewhere.
The Telegraph was told by some banks that they would increase savings rates in September. However, the promised increases were still lower than the 0.5 percentage point Bank Rate rise this month.
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