Where is our booster? Ten days after the BoE’s rate hike … and STILL the big banks refuse to do better for savers
- Bank of England raised policy rate from 0.1% to 0.25% ten days ago
- But banks have so far refused to increase customer savings rates
- Many banks only pay 10 pence of annual interest for every Â£ 1,000 saved
The country’s big banks are steadfastly refusing to hand out Christmas cheers to their beleaguered savers.
Although the Bank of England raised its key rate from 0.1 to 0.25% ten days ago, none of the major banks have yet committed to offering savers a better deal.
This means that millions of bank savers continue to receive a paltry 0.01% annual interest on their money in instant access savings accounts and Isas in cash – 10 pence for every Â£ 1,000 saved.
No rate hike for customers: UK banks so far refuse to play ball
Seven days ago, The Mail on Sunday launched its “Give Savers A Rate Rise” campaign, aimed at encouraging banks to treat their savers better after years of neglect.
We believe that any increase in savings rates should be backdated to December 16, when the base rate was raised.
We also believe that any increase should at least match the rate increase of 0.15% of the base rate, although it could be argued that this would not be enough.
That would mean the rate on most instant access savings accounts and Isas cash would rise to 0.16 percent – still a miser of Â£ 1.60 on every Â£ 1,000 saved.
But banks have so far refused to play the game, putting profits before treating customers fairly – an obligation imposed on them by the Financial Conduct Authority, the city’s regulator.
The FCA has tried in the past to help savers achieve better cash savings rates, but its initiatives have so far had no positive impact.
In the wake of the base rate hike, we asked all major banks if they intended to increase savings rates on accounts where income payments are at the discretion of the provider – not fixed or linked to the base rate.
None of them offered a glimmer of hope to its savers, only Lloyds Bank – owner of the Halifax, Birmingham Midshires and Bank of Scotland savings brands – offering a glimpse of its thinking.
He said any interest rate change would come from February next year, more than six weeks after the base rate hike.
Unimpressed, The Mail on Sunday returned to the big banks on Christmas Eve to see if they had made any headway in setting new savings rates – especially in light of the fact that savings giant NS&I is making progress. increase interest rates by 0.25 percentage point (Direct Isa) and 0.2 percentage point (Direct Saver and Income Bonds).
Their responses – or lack thereof – are presented below. The delay displayed by the banks annoys both readers and savings experts.
Many banks only pay 10 pence of annual interest for every Â£ 1,000 saved
Andrew Hagger, personal finance expert at Moneycomms.co.uk, is one of them.
He says, “The big banks don’t deserve to have money in their savings accounts, paying an insulting 0.01 percent.”
He adds: âBetween them, the big banks and the building societies are spending a small fortune on television advertising telling us that they are there for us.
“But it all seems hollow when you look at the meager returns offered to loyal savers.” Hagger says now is the time for traditional savings providers to be required to tie rate changes on Isas cash and instant access savings accounts to the base rate.
Thus, when the base rate increases by 0.15 percentage point, savings rates would increase by the same amount.
Peter Bradbourne, retired managing director of a drainage company in Wetherby in West Yorkshire, accuses the banks of acting “shamefully”. Peter – in his sixties, married and retired for seven years – says it’s a “bad time for retired savers.”
He adds, “Bankers seem to think that because a cash Isa is tax-free, it should be almost irrelevant to savers.”
Anna Bowes, co-founder of rate scrutineer Savings Champion, said: âMain Street banks should certainly give their savers a glimmer of hope that they will be supported and rewarded for their loyalty.
âSadly, more than a week after the Bank of England’s base rate was announced, their silence is deafening.â
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