Dozens of savings accounts are paying interest of 0.1 per cent or less on balances of many thousands of pounds, even though some are branded as “premier”, “reward” or “bonus savings”.
More than one in four instant access accounts are now paying near-zero rates on balances of up to £10,000, with many also giving minimal returns even on much higher sums, according to research provided for the FT by Defaqto.
Additionally, some savers are earning 0.1 per cent or less on accounts requiring notice of up to a few months for withdrawals.
The roll-call of the worst- paying savings accounts includes a wide range of banks and building societies and underlines the need to switch accounts to improve returns following the drop in interest rates to a record low.
“For savers, this looks absolutely appalling. It should be a wake-up call to get a better deal elsewhere,” said David Black, banking consultant at Defaqto.
The poor-paying accounts listed in the table below include only those that are still available to new customers, so there could also be many “obsolete” or closed accounts that are paying similar or worse rates, he added.
By comparison, the highest-paying variable-rate accounts are offering up to about 3 per cent, while top fixed-rate savings bonds are yielding more than 4 per cent.
Black said that the highest-paying accounts tend to be recently launched and often involve bonuses lasting for only a limited period, so savers who had been in the same account for some time should review their rates. Poor-paying accounts with names such as Bonus Savings (First Direct), Saver Reward (Halifax) and Premier Saver (West Bromwich Building Society) could have been giving relatively competitive returns in the past, he said.
Adrian Lloyd, compliance director at the Banking Code Standards Board watchdog, said that many savings accounts that were branded “gold” had been poor payers for some time. However, under industry rules, an account’s name is not sufficient grounds for a complaint about returns, he pointed out. Similarly, banks and societies are not required to notify savers of low returns, but only when rates are reduced significantly more than cuts in the base rate.
Defaqto analysis shows that Halifax, the leading savings provider, has three accounts paying 0.1 per cent even on very high balances, including the widely-held Liquid Gold account.
The bank said it “actively encouraged” customers to have a “savings review” with an adviser when they visited a branch, and wrote to account holders every April with details of all rates.
Kevin Mountford, head of savings at Moneysupermarket.com, a comparison service, emphasised that many savers in poor-paying accounts could boost their returns by switching to fixed-rate bonds. “Rates of 4 per cent-plus are a hell of a premium over a 0.5 per cent base rate – bonds are where the competition is,” he said. He noted that fixed-rate offers are improving and could edge up to 4.5 per cent or more in the next few weeks.
