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Building societies trump banks in savings rate battle

Joanna Faith
Written By:
Joanna Faith

Building societies continue to offer greater value to long-suffering savers than banks, figures reveal.

Over 80% of building society accounts pay more than the 0.25% Bank of England base rate, compared to just 58% of accounts held with banks, according to the statistics from Savings Champion.

The rate tracking firm said the average live variable rate from banks has halved in the last five years.

Throughout 2016, building societies, on average, paid significantly higher rates than their banking counterparts – 1.09% versus 0.81%.

Savings rates have tumbled in recent years especially since the introduction of the government’s Funding For Lending scheme in 2012 and Term Funding Scheme last year. These schemes provide banks with access to cheap funding, which means they no longer have to compete as fiercely for savers’ deposits.

Susan Hannums, director at Savings Champion, said: “These figures highlight some of the stark differences between the two types of provider, with building societies demonstrating a greater commitment to treating their customers more fairly than some of their banking counterparts.

“Whilst there are exceptions within each group, in particular the challenger banks, which continue to support savers with better rates on offer for those looking to open accounts, on the whole the figures tell an interesting story for customers of both groups.”

She said traditional banks continue to demonstrate their reluctance to encourage both new and existing customers to put their money with them and those who hold low-paying accounts with them need to switch to a better alternative.

Best building society savings rates

Provider Account Name Gross AER Minimum Maximum
Easy Access Leeds Building Society Limited Issue Online Access Account 1.05% 1.05% £1,000 £250,000
West Brom Building Society WeBSave Bonus Saver 2 1.05% 1.05% £1,000 £250,000
Coventry Building Society Easy Access Saver (4) 0.85% 0.85% £1 £250,000
Variable Rate ISAs Teachers Building Society Cash ISA Notice 90 (Issue 6) 1.05% 1.05% £100 £100,000
Coventry Building Society Easy Access ISA (5) 0.90% 0.90% £1 £15,240
Children’s Account Saffron Building Society Children’s Regular Saver 4.00% 4.00% £5 £1,200
Junior ISA Coventry Building Society Junior Cash ISA 3.25% 3.25% £1 No Maximum
Help to Buy ISA Buckinghamshire Building Society Help to Buy: ISA Issue 2 2.25% 2.25% £1 No Maximum


Worst bank savings rates

Provider Account Name Gross AER Minimum Maximum
Live HSBC Flexible Saver 0.01% 0.01% £1 £1,000,000
NatWest Instant Saver 0.01% 0.01% £1 £10,000,000
Royal Bank of Scotland Instant Saver 0.01% 0.01% £1 £49,999
0.05% 0.05% £50,000 £1,000,000
Barclays Everyday Saver 0.05% 0.05% £1 £10,000,000
HSBC Flexible Saver – Preferential rates 0.05% 0.05% £1 £1,000,000
HSBC Premier Savings 0.05% 0.05% £1 £10,000,000
Closed HSBC Instant Access Savings 0.01% 0.01% £1 £10,000,000
Santander Instant Saver 0.01% 0.01% £1 £2,000,000

 Source: Savings Champion. Data correct as of 20.2.17