Loyalty penalty for big bank savers

Category: Savings
Author: Lieke Braadbaart
Date: 30/04/2018

Easy access savers who stick with the most familiar banks could be missing out on much bigger returns, as these accounts still pay less than base rate (which currently stands at 0.50%). So, if you have a current account with one of the biggest banks and are unhappy with the rate on your linked savings account, for instance, you may want to look at some less familiar brands to switch to.

Unfavourable comparison

Indeed, our latest research shows that the difference between the best easy access account on the market and the worst big bank rate, when looking at the biggest providers (Bank of Scotland, Barclays Bank, Halifax, HSBC, Lloyds Bank, NatWest, Royal Bank of Scotland, Santander and TSB), could see savers £250 better off per year thanks to interest (based on a £20,000 deposit). The tables below further illustrate just how big the difference can be.

Source: Moneyfacts.co.uk

Source: Moneyfacts.co.uk

"Savers are paying for the convenience of keeping their cash with their main bank, rather than chasing down the best possible deal for flexible access to their savings," commented Rachel Springall, finance expert at moneyfacts.co.uk. "HSBC currently pays 0.05% on an easy access account, which would earn just £10 a year in interest on a £20,000 deposit."

In contrast, "the more unfamiliar brands, such as challenger banks, are fighting for savers' attention by offering some decent deals," Rachel said. "In comparison to HSBC's account, for example, RCI Bank UK would return £260 on the same deposit."

Holding out hope

While we talked last week about the next base rate rise now seeming less likely to occur in May, many could still be pinning their hopes on it. Additionally, Rachel pointed out that "as we have seen in November, there is no guarantee that every savings provider will pass on a rate rise. Some of the biggest banks were very selective about which accounts got the full 0.25% rise in November."

With that in mind, Rachel concluded: "As the savings market continues to improve away from the big banks, it's more important than ever for consumers to be on the lookout for a better rate, and more importantly, switch if they are getting a raw deal."

What next?

Have a look at our easy access account charts – with or without a fixed bonus – to see if there's a deal there worth your attention