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Loyalty doesn’t pay in savings market

Emma Lunn
Written By:
Emma Lunn

Savers who stay put with their existing savings provider have been advised to rethink their loyalty.

Savers with easy access savings accounts with well-known savings providers are likely to be earning very little interest on their money.

Analysis of easy access accounts from 15 well-known brands by Moneyfacts found only six would pay a better return on average versus the market average easy access rate, but the remaining brands would pay less on average.

Yorkshire Building Society, Leeds Building Society and Virgin Money come out on top, paying an average of 0.57%, 0.48% and 0.47% respectively across their ranges, well above the market average rate of 0.32%.

The biggest banks pay an average return at the opposite end of the scale however, including Lloyds Banking Group at 0.02%, Santander at 0.10%, RBS Group at 0.15%, HSBC at 0.17%, TSB at 0.24% and Barclays Bank at 0.29%.

Rachel Springall, finance expert at Moneyfacts.co.uk, says: “Consumers may now be feeling the impact of the two base rate cuts and the coronavirus pandemic on their savings pot, particularly if they have their cash with one of the biggest well-known brands. In fact, it is more likely than not that they would be earning less than the market average easy access rate today.

“Once these developments have hit home, it could well force savers to be more vigilant and be proactive to switch – or they may face earning next to nothing on their hard-earned cash. Not only this, but savers on the poorer interest rates will find the true spending power of their cash is being eroded by inflation, as there are less than 30 deals that can outpace 0.80% today based on a deposit of £10,000. This means more effort will need to be made to scope out the top rates in the market.”

Savers wanting to move their money to a better paying account should act quickly as savings providers can be flooded with deposits and may choose to cut their rate to deter investors, or as a last resort, pull their deal entirely.

The murmurings of negative interest rates will be a further blow to savers, as interest rates on the most flexible of accounts could well be cut even more so and there may even be accounts that will no longer pay any interest to hold savers’ cash.

“It is clear as day to see that loyalty does not pay when it comes to savings accounts – if consumers want the best return they will have to shop around and move their money quickly to ensure they don’t miss out on the most lucrative deals,” says Springall.