Savers are better off with building societies than banks, says research
More than two-thirds (67%) of building society accounts pay a higher rate than the Bank of England base rate, which is currently 0.75%, compared to just over half (51%) of banks, according to Savings Champion.
Over the last 12 months, the overall average variable interest rate paid by building societies was 1.07%, compared to 0.84% from the banks.
Anna Bowes, co-founder of Savings Champion, said: “When it comes to the average rates, there is a clear disparity between the two groups and it demonstrates that building societies on the whole pay higher rates and are therefore treating savers more fairly than banks.”
However, Bowes pointed out that challenger banks are clearly the exception to the rule as many of these providers dominate the best buy tables.
“The same cannot be said of the big high street banks, which are dragging the average rates down by paying some of the worst rates on the market,” Bowes said.
New measures announced by the city regulator last week may improve the rates on some old accounts, but savers are still encouraged to switch to a more competitive deal rather than accept paltry returns.
Under the new rules, banks will have to set one easy access rate for all accounts that have been open for more than 12 months. They will still be able to offer multiple introductory rates but after the one year, all accounts must pay the same rate and details of this rate must be published every six months to help savers compare deals.