RATE WARNING
How millions of savers are being locked out of top rates – and how to find the best accounts
One energy company plans to shake up the market with 'free electricity sessions'
SAVERS who do not bank online or via their smartphone are being punished with poor interest rates.
With the Bank of England cutting the base rate, many banks’ top fixed rates are disappearing, leaving savers with meagre returns.
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This week, Ruth Kirby-Jackson studies the Best Buy savings rates from banks.
FORGOTTEN SAVERS
THE top six easy-access savings accounts require you to bank either via smartphone or online.
Banks now prefer to attract savers to their online accounts as they are cheaper to run than branch or postal accounts.
The best easy access savings rate available to customers who want to bank in branch or by post is 4.81 per cent from Scottish Building Society.
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That is way below the top-of-the-table best buy account, which pays five per cent, but you must operate it online.
Over the course of a year it is a difference of £19 on a £10,000 balance.
And over a decade, offline savers could be missing out on hundreds of pounds in interest because the banks discriminate against them.
Of the top 20 Best Buy easy-access savings accounts just two can be opened and operated by post.
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The Scottish Building Society account and The Family Building Society, with its Market Tracker Saver paying 4.76 per cent.
Rachel Springall, finance expert at , says: “Savers looking for an easy-access account will find most options offer online access, but they may have to sacrifice a higher interest rate for an account that allows branch or postal access.”
Lloyds Banking Group CEO Charlie Nunn warns households not to expect ultra-low interest rates
IN-BRANCH PENALTY
YOU will also find big differences between online and in-branch rates.
For example, HSBC pays up to four per cent interest on its Online Bonus Saver, but people who want to bank in branch will have to settle for two per cent interest from its Flexible Saver.
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Santander pays six per cent on its Edge saver account, which is online only.
If you want to bank in branch, the best rate you can get is 2.2 per cent on its Limited Access Saver.
“There’s a strategic element at play,” says Myron Jobson, senior personal finance analyst at Interactive Investor.
“The cost of maintaining physical bank branches and staffing them is substantial, while online banking sig- nificantly reduces these overhead costs.
Banks are keen to encourage digital adoption among their savers to save on costs.”
If you do want to open an in-branch or post account then it’s best to check your local building society. Rates here are around 4.85 per cent.
Best branch savings accounts
- Scottish Building Society, Saver Plus, 4.81%
- Family Building Society, Market Tracker Saver, 4.76%
- Principality Building Society, Branch 5 Access Bonus Saver, 4.60%
- Kent Reliance, Easy Access Account, 4.50%
- Dudley Building Society, Easy Access Saver, 4.25%
BANK BRANCH CLOSURES
BRANCH closures are only making the problem worse.
More than 1,000 closures have been announced in the last 18 months, with 44 shutting this month.
Once their local bank branch has closed, customers are left with a stark choice — either embrace online banking, be prepared to travel to your next nearest branch (and accept whatever interest rates they offer) or hunt for accounts that can be opened and operated by post.
Best postal savings accounts
- Scottish Building Society, Saver Plus, 4.81%
- Family Building Society, Market Tracker Saver, 4.76%
- East Shilton Building Society, Progress Account, 4.35%
- Dudley Building Society, Easy Access Saver, 4.25%
- Post Office Money, Instant Saver, 4.10%
GET YOUR FAMILY TO HELP
A FRIEND or family member may be able to help you get a better rate than those offered for accounts opened by post or in branch.
Some savings accounts can be managed by post, but you have to open them online.
For example, Close Brothers has a one-year fixed-rate bond paying five per cent.
You must open the account online but once it is up and running you will be able to manage it by post.
Getting someone to help you open the account online means you can get that top-table interest rate, then you can operate the account yourself by post.
Although, in this case you could get a better rate with Union Bank of India’s fixed-rate deposit which pays 5.25 per cent.
It can be opened and operated by post.
You will have to call 020 7332 4250 or pop into the only branch — which is in London — to get the application forms.
Heat is on to get benefits
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MORE than a million OAPs could be missing out on up to £4,000 a year in Pension Credit – jeopardising their right to the winter fuel payment.
Government stats show the number of Pension Credit recipients fell three per cent last year, with 1.2million missing out.
And that could have a knock-on effect amid plans by Chancellor Rachel Reeves, above, to restrict the energy allowance.
Currently worth up to £300 to anyone over state pension age, she proposes that, in future, the winter fuel payment only goes to retirees on Pension Credit or other means-tested benefits.
That means those already hit in the pocket by not claiming the handout could also now lose their fuel allowance.
Joanna Elson, chief executive of charity Independent Age, said: “It has never been more important older people on a low income start receiving this financial entitlement, or they will not only continue to lose this money, they’ll also miss out on the winter fuel payment if the Government’s changes go ahead in the autumn to means test it.”
Pension Credit tops up an older person’s low income to £218.15 a week if they are single, or to £332.95 if they have a partner.
To qualify for this year’s winter fuel payment, you must have been claiming Pension Credit between September 16 and 22.
The Department for Work and Pensions can take up to two months to process new claims.
Emma Lake
Octopus Energy freebie
OCTOPUS Energy is shaking up the market by introducing “free electricity sessions” when wholesale prices drop below zero.
Anyone enrolled in the “Octoplus” rewards scheme can participate.
During hour-long sessions, customers can use electricity for free and earn energy credits for exceeding their typical usage.
All customers with a smart meter will receive an alert the day before each session.
When the session begins, they can ramp up their electricity use.
If Octopus Energy was to run 14 sessions over the year, average households in- creasing use by 5kWh could earn up to £17.
The scheme follows a record 214 hours of negative wholesale power prices in 2023 in Britain, driven by excess wind. Currently, wind farms receive curtailment payments, exceeding £300million last year, to reduce output and prevent grid overload.
Octopus is the first company to “pay” customers to use more energy if there is surplus.
Energy firms are looking for ways to encourage customers to use less energy at certain times.
This follows plans from the regulator to introduce an energy price cap varying on the time of day.
Last year, some energy firms paid customers to reduce energy use during winter. It was in response to the National Grid’s drive to prevent black-outs.
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Octopus Energy launched a scheme giving customers two-hour windows.
James Flanders
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