DON'T BANK ON IT
High street banks offering ‘meagre’ savings rates as best and worst revealed
Pus, we tell you how to switch and get the best rates
SAVERS should ditch "meagre" rates at high street banks for better returns elsewhere.
Experts have warned that the most competitive saving rates are no longer coming from the big banks you'd expect.
Digital banks and building societies are now offering better deals on interest than high street names like HSBC and Barclays, according to Which?
Fresh data from the consumer champion shows which providers are offering the best and worst savings rates.
Which? used data from over 5,000 accounts from 120 providers over the 12 weeks and gave an interest rate score out of 100.
The interest rate score is based on analysis of Moneyfacts data collected weekly, between 24 June 2024 and 9 September 2024. An interest rate score of 100 represents the market leading rate.
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The best ranked for interest rates came from little-known providers, with Cahoot taking the leading spot with 95.
The second best interest rates came from Bank of London and Middle East with 94%.
And British online bank Zopa was ranked third with a 92 interest score.
Meanwhile Leeds Building Society and Kent Reliance scored 91, and Virgin Money and Charter Savings Bank 89%.
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Meanwhile, many top high street banks scored at the lower end of the list.
Metro Bank scored the lowest with 31, followed by HSBC with 39.
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Barclays and Santander had the third lowest interest ratings with a score of 51 each.
Bank of Scotland also scored drastically low at 52, and Lloyds Bank 53.
Some banks which maintained satisfactory interest ratings were Nationwide and Natwest with 76 and 87 respectively - but neither options quite topped the list.
The results reveal a huge gap in performance between high street banks and digital services or building societies.
Rates offered by HSBC, Bank of Scotland and Barclays were 2%, 1.8% and 1.6%.
By contrast, the average rates offered by Zopa, Marcus by Goldman Sachs and Yorkshire Building Society on an instant savings account were 4.44%, 4.45% and 4.91% respectively.
Sam Richardson, deputy editor of Which? Money, said: “High street banks continue to lag behind digital banks and building societies - not just on the competitiveness of interest rates offered but also how happy their customers are.
“With interest rates starting to come down, savers may want to consider switching providers to a more competitive rate.
"As our analysis shows, loyalty is seldom rewarded and, if you’re with a high street name, now could be the time to move your money.”
Saving rates change regularly and a recent cut to the Bank of England base rate is expected to have a knock on effect to those available to savers.
Major banks like Barclays Natwest and Santander have alrready reduced rates on some savings accounts.
How to get the best savings rates
To make sure you are getting the best rates on offer, it helps to check best buy savings tables regularly.
You can use comparison sites such as Moneyfactscompare.co.uk and Go Compare to do this.
Then you can filter your search to find an account type which suits your preferences.
There are four different types of savings accounts: fixed, easy access, regular saver and Individual Savings Account (ISA).
With a fixed-rate savings account you get a high interest rate but must lock your money away for an agreed period of time.
Some accounts let you make a certain number of withdrawals while others do not allow you to access the money at all without a hefty fee.
This means if interest rates change you can't switch your money over to a different account.
An easy-access account gives you immediate access to your cash and usually allows unlimited cash withdrawals.
Here you usually pay a lower rate than fixed-rate ones but it's a good option if you need to move your money due to an unforeseen emergency.
Meanwhile, with a regular saver account you put away a certain amount of money each month for a set period.
They usually pay a decent return but the amount you can save each month is often quite low.
Finally, an Isa is a tax-free savings account in which you can save up to £20,000 each year.
There are four types of Isa: a cash Isa, stocks and shares Isa, innovative finance Isa and Lifetime Isa.
These accounts can be helpful for people who are at risk of needing to pay tax on any interest they earn from their savings.
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You can earn as much as £1,000 in interest from your savings each year if you are a basic rate taxpayer
This falls to £500 if you are a higher-rate taxpayer and disappears entirely for additional-rate taxpayers.
Where to find the best savings rates
Many savings accounts offer miserly rates meaning that money is generating little or no return.
However, there are ways to get your cash working hard. Sun Savers Editor Lana Clements explains how to make sure you money is getting the best interest rate.
Easy access savings accounts offer flexibility for customers, meaning they can dip in and out of cash when needed. However, the caveat is that rates can change at any time.
If you're keeping your money in an easy access account, you'll need to keep checking whether it's the best paying account for your circumstances and move if not.
Check in at least once a month to see what is happening in the market.
Check what is offered by your bank - sometimes the best rates are for customers only.
But do search the wider market as often top savings accounts are offered by lesser known providers.
Comparison sites are a good place to check for the top rates. Try Moneyfactscompare.co.uk or Moneysupermarket.
You can search by different account type. You'll usually get a better interest rate if you can lock your money away for a fixed amount of time, but it's always a good idea to keep some money in an easy access account in case of emergencies.
Don't overlook regular savings accounts often pay some of the best rates, but you'll need to commit to monthly payments. This can be a great way to get into a savings habit while earning top rates at the same time.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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