Exposed: The big banks refusing to pass on last week’s rate rise

The gulf between top savings rates from High Street banks and returns from smaller rivals is widening.

You can now earn 3.26 per cent in the best easy-access accounts and this rate could edge higher yet after the Bank of England raised base rate last week.

But with High Street banks you can earn just 0.25 per cent. Someone with a £10,000 savings pot in the poorest-paying account would lose out on £295 in interest in one year.

The Bank of England increased base rate by 0.25 percentage points to 4.25 per cent last week. It’s the highest rate for more than 14 years and the 11th hike since it began climbing from its historic low of 0.1 per cent in December 2021.

Returns savers can make are miles off the punishing 10.4 per cent annual rise in the cost of living, but savers need to get the top rates to protect their nest-eggs as best they can.

Top deals: You can earn 3.2% in the best easy access accounts and this rate could edge higher after the Bank of England raised base rate last week. But High Street banks pay just 0.25%

The average easy-access deal, according to Moneyfactscompare, is up from 0.25 per cent a year ago to 1.85 per cent now. 

But that is more than double the best rate offered by some of the big banks. Their accounts are popular with savers who hold more than £800 billion in them and earn between 0.25 per cent at worst and 1.2 per cent at best.

The big banks have passed on just a fraction of base rate rises to hard-pressed savers. 

The big four — Barclays, HSBC, Lloyds (including Halifax and the Bank of Scotland) and NatWest (including RBS) — were hauled before the Treasury Select Committee and criticised for their behaviour last month. But until that changes savers need to seek out better rates elsewhere.

Rachel Springall, of rate monitor Moneyfactscompare, says: ‘Not every savings provider passes on a base rate rise, so it’s crucial for savers to keep on top of the changing market. 

Newer banks and building societies offer the best returns while most of the big banks pay less than 1 per cent.’

Lloyds, which has some £120 billion in easy-access accounts throughout the group, pays just 0.65 per cent on balances up to £25,000 in its Easy Saver and Standard Saver.

In Halifax Everyday Saver and Instant Saver along with Bank of Scotland Access Saver you earn 0.7 per cent on sums up to £10,000 and 0.8 pc between £10,000 and £50,000.

NatWest, which has some £92.5 billion in easy-access accounts, raised the rate it pays on sums between £1 and £25,000 in its Flexible Saver and Instant Saver to 1 per cent last week, following its appearance before the government body. RBS Flexible Saver pays the same rates.

Barclays and HSBC refused to say how much they have in easy-access accounts, saying the information was commercially sensitive.

Barclays pays 0.55 per cent on its easy-access Everyday Saver account while HSBC, the best of a bad bunch, raised its rate to 1.2 per cent on its Flexible Saver earlier this month.

Rates at other big banks include Virgin Money at 0.25 per cent on its Everyday Saver, TSB Easy Saver at 0.6 per cent and Santander 0.7 per cent on its Everyday Saver.

All have remained silent following last week’s base rate rise, while new banks and some building societies quickly announced improved rates for savers.

Atom put its Instant Saver rate up to 3.2 per cent, more than double the best-paying account with the big banks, and a whisker behind the 3.21 per cent paid by Zopa.

Charter Savings Bank Easy Access raised its rate to 3.18 per cent. Yesterday, Shawbrook moved to 3.26 per cent while Family BS launched an online saver, also at 3.26 per cent.

Yorkshire BS announced its rates will go up by 0.25 percentage points from next Wednesday. 

Its Rainy Day Savings account goes up to 3.6 per cent on the first £5,000 in your account. On anything over this your rate is 3.1 per cent. But you can only make withdrawals on two days a year from the account.

Its Internet Saver Plus Issue 13 will pay 3 per cent on £1, while its branch and postal-based Access Saver Plus Issue 7 goes up to 2.8 per cent. Both accounts let you put money in or make withdrawals out whenever you like.

Coventry BS rates will rise from April 4 by up to 0.15 percentage points. Its online Easy Access account will pay 2.7 per cent and its branch-based Easy Access Saver 2.4 per cent.

Your money is protected by all banks and building societies mentioned by Money Mail up to £85,000, or £170,000 on joint accounts, by the Financial Services Compensation Scheme.

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