Savers who like to monitor their account activity by using a passbook are receiving lower returns on their money.
The accounts, which provide a book to record bank transactions, now pay out 1.23 per cent to savers, 0.12 percentage points less than the average rate available for easy access accounts.
Financial experts say these types of accounts tend to be favoured by many pensioners, who are earning less money on their savings as a consequence.
Pensioners have already been identified as some of the biggest losers from the series of interest rate cuts executed by the Bank of England. Those who rely on income yielded from their savings have seen their monthly incomings significantly reduced.
The average interest paid to easy access savings accounts has fallen from nearly 6 per cent a year ago to just 1.35 per cent now, according to data from comparison site Moneyfacts.co.uk. Accounts that come with a passbook have fallen even further.
In order to cut administrative costs banks and building societies have been trying to tempt savers away from passbook accounts and into online and telephone accounts by offering them different rates.
Many passbook accounts have also been closed to new savers. Of the remaining 646 passbook accounts still open nearly half pay out less than 1 per cent.
Advisers say savers who want to earn the maximum income possible from their savings should consider moving their money to alternative accounts that offer better rates.
However Sean Gardner, director of MoneyExpert.com, said he understood why many customers might be reluctant to give up their passbook and swap to an online account. “When there is genuine concern about the safety and security of banks and building societies it is no surprise that people want proof in black and white that their money is there,” he said.
For savers who wish to retain a passbook the best rate currently available is 3.75 per cent from Stroud & Swindon Building Society in their Bonus Guarantee Account. The account is available on sums over £500 and below £500,000, and guarantees to pay at least 1 per cent above the Bank of England’s interest rate until the end of the year.
