The £6.8bn High Street savings robbery: All major providers set to pay just 0.01% interest on easy-access deals from next month
Loyal savers are missing out on billions of pounds in interest by sticking with High Street banking giants.
From July, all major providers will pay a miserly 0.01 per cent interest to customers with easy-access deals. Savings rates have plummeted to record lows since the Bank of England base rate fell to 0.1 per cent in March.
Experts warn that customers with big providers – such as Halifax, NatWest and HSBC – are suffering the worst rate cuts.
Rate cuts: As of next month, every major provider will pay a miserly 0.01% interest to customers with popular easy-access deals
Money has poured into these banks in recent months as families desperately try to safeguard their cash during the pandemic.
Overall, the largest nine providers hold £687 billion in their easy-access accounts —more than two-thirds of savers’ money.
It is estimated that savers are missing out on up to £6.8 billion a year in interest, but could earn up 100 times more interest elsewhere.
Savers earn just £1 interest on a £10,000 pot with the big banks. With inflation at 0.5 per cent, they need £50 just to keep the spending power of their money intact.
National Savings & Investments Direct Saver has the best rate at 1 per cent – or £100 interest on each £10,000.
If big banks paid savers 1 per cent, they would need to shell out an extra £6.8 billion in interest on money held in easy-access accounts.
But they don’t need to attract savers’ cash, because they can borrow from the Bank of England at rock-bottom rates.
The findings come after Bank of England figures showed that households saved £16.2 billion in April – three times the typical £5 billion a month they put aside in the six months to February.
Despite job losses and pay cuts, large expenses such as holidays, commuting costs and entertainment have vanished following social-distancing restrictions – giving households the chance to set aside money during uncertain times.
Justin Modray, director of Candid Financial Advice, says: ‘This is a devastating blow for savers, and yet another example of banks showing scant regard for their loyal customers.
It’s well worth checking the rate on your savings and switching to earn some interest, if necessary.’