The low savings rates on offer from Britain’s biggest banks have been laid bare even more today, thanks to a sharp fall in the consumer prices index.
Hundreds of accounts now beat inflation after CPI fell to its lowest level in five years in August, at 0.2 per cent.
Overall, just 11 accounts offered by Barclays, HSBC, Lloyds, Nationwide Building Society, NatWest, Santander and TSB pay at least August’s consumer prices index reading of 0.2 per cent, a fraction of the 661 inflation-matching accounts available overall.
These include fixed-rates, cash Isas and notice accounts.
Just 11 accounts offered by Britain’s biggest banks pay at least 0.2% and match the low rate of inflation
Additionally, of the 87 bread and butter easy-access savings accounts currently paying at least 0.2 per cent, just one, from Nationwide which restricts savers to three withdrawals a year, is offered by Britain’s biggest high street names.
Britain’s five biggest banks Barclays, HSBC, Lloyds, NatWest and Santander have all paid as little as £1 interest on £10,000 of savings since the end of July, slashing deposit rates to close to nothing on the back of a record low Bank of England base rate.
Experts have continuously warned savers to move the billions of pounds they hold with Britain’s biggest banks away from the high street to earn greater returns on their money and potentially stimulate competition.
Figures from Moneyfacts show that fewer than half-a-dozen accounts available on the high street match or beat last month’s inflation reading, which at 0.2 per cent hit its lowest level since December 2015.
The Office for National Statistics found CPI, which has fluctuated in recent months and surprisingly increased to 1 per cent in July, fell in August largely on the back of falling restaurant prices due to the Government’s Eat Out to Help Out discount scheme and a cut in VAT.
The cost of plane tickets also fell in August for the first time on record as fewer people travelled abroad, the ONS said.
|Number of inflation-matching easy-access accounts||Number of inflation-matching accounts in total|
|Seven high street banks||1||11|
The Consumer Prices Index measure of inflation stood at just 0.2% in August after the government’s Eat Out to Help Out scheme pushed down restaurant prices
And with inflation so low, even the small number of accounts from Britain’s biggest banks which do currently match or beat the CPI can be topped elsewhere if savers switch.
The vast majority of the 845 savings accounts available currently beat the CPI.
Nationwide’s 0.25 per cent Triple Access Online saver, the only easy-access account offered by the big seven which pays 0.2 per cent or more, compares to a top rate of 1.2 per cent offered by Skipton Building Society.
This is a difference of £95 a year on £10,000 of savings.
And while Barclays, HSBC and Nationwide all offer a one-year fixed-rate bond paying 0.3 per cent, this compares to the 1.25 per cent savers can earn with Secure Trust Bank, the best rate available on the market.
Analysts also predicted that inflation could be set to rise from the start of next year, making it especially important for savers to earn as much as they possibly can.
When it was announced last month that inflation surprisingly rose to 1 per cent in July, just 91 accounts paid that much, an 80 per cent fall on the month before, highlighting how savings rates remain low despite something of a recent recovery.
This is Money reported at the end of July how savings in the first six months of this year swelled the deposits of Barclays by 10 per cent, or £20.2billion, and of Santander by £6billion, despite the two big banks paying savers little in return.
Meanwhile, Andrew Davis, commercial director at TSB recently said it was ‘a great fallacy’ that the interest paid on savings was important to customers, describing them as only ‘the icing on the cake’.