If you haven't checked your savings in a while you could be in for a nasty surprise. Around a third of variable rate accounts are paying 0.1% or less annual interest..
If you have savings in a bank or building society variable rate account there's about a 1 in 3 chance you're earning just 0.1% or less a year. Granted, you can't expect much when the Bank of England base rate has been stuck at 0.5% since March 2009, but as it's possible to find accounts paying over 2% there's no reason for savers to put up with appallingly low rates.
Why do some banks pay 0.1%? Simple, because they can get away with it thanks to legions of lazy savers. And in some ways we should be grateful to those lazy savers, because paying 0.1% on some accounts gives banks the cash to offer artificially high rates on other accounts designed to attract new customers.
I updated some data I put together a few months ago on this and the situation is getting worse, not better, with the number of accounts paying 0.1% or less increasing. And with base rate likely to remain at 0.5% for a while longer yet I expect this trend of falling savings rates to continue.
So the key, unsurprisingly, is to play the game by reviewing your savings regularly and not hesitating to switch to a better rate elsewhere if yours starts to wane. Yes, it's a chore, but if you have a reasonable amount of savings it'll be time profitably spent - an extra 1% is worth £100 a year per £10,000.
Here's a summary of the main banks and building societies, to give you a feel for who the worst offenders are:
| Bank/Building Society | % of ALL accounts paying 0.1% or less* | % of OPEN accounts paying 0.1% or less* | % of CLOSED accounts paying 0.1% or less* | Total accounts reviewed* |
|---|---|---|---|---|
| Barclays | 62% | 25% | 73% | 34 |
| Lloyds TSB | 59% | 20% | 79% | 29 |
| Royal Bank of Scotland | 58% | 45% | 69% | 24 |
| Cheltenham & Gloucester | 53% | 38% | 71% | 15 |
| Natwest | 53% | 50% | 57% | 19 |
| Newcastle BS | 49% | 15% | 59% | 84 |
| West Bromwich BS | 49% | 68% | 26% | 41 |
| Co-Operative | 48% | 22% | 67% | 21 |
| Halifax | 48% | 48% | N/A | 21 |
| Santander | 45% | 38% | 48% | 58 |
| HSBC | 35% | 43% | 17% | 20 |
| Nationwide | 34% | 28% | 45% | 29 |
| Leeds BS | 32% | 38% | 27% | 59 |
| Skipton BS | 29% | 0% | 32% | 127 |
| Principality BS | 24% | 11% | 40% | 33 |
| Alliance & Leicester | 19% | 0% | 19% | 27 |
| Yorkshire BS | 16% | 19% | 0% | 25 |
| Chelsea BS | 8% | 0% | 9% | 63 |
| Coventry BS | 8% | 6% | 10% | 39 |
| Northern Rock | 3% | 17% | 0% | 38 |
| Average/Total | 34% | 30% | 37% | 806 |
| * includes all variable rate personal savings accounts. Rates used assume the lowest allowed balance is held. Temporary bonuses ignored if they may have already ended. Data compiled on 06 September 2010. Source: www.candidmoney.com | ||||
You can find out more about switching savings accounts in our Review Your Savings Accounts Action Plan.
Read this article at http://www.candidmoney.com/articles/article151.aspx
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