THE predicament of hard-pressed savers continues to get worse as the huge high street banks slash their savings rates to the bone. The average return from an easy access cost savings account has actually collapsed from 1.34 per cent a year ago to simply 0.54 percent today, according to special brand-new research for the Daily Express from cost savings rate tracking service SavingsChampion.co.uk.
It is not all doom and grief, as the new breed of so-called challenger banks is tossing down the gauntlet to their bigger rivals. Progressively, the likes of Aldermore, Charter Savings Bank, Ikano Bank, Fidor Bank, FirstSave, RCI Bank, Shawbrook, Tesco Bank and Virgin Money top the best-buy tables for easy-access savings accounts and fixed-term bonds.
Regional building societies such as the Nottingham, Coventry and the West Bromwich likewise figure extremely.
Too many savers maintain lost loyalty to the likes of Barclays, RBS, HSBC, Lloyds, Nationwide, NatWest, and Santander, even though there are better rates in other places.
Government-backed National Savings and Investments has also hit savers with its relocate to cut the rates on Premium Bonds from this month, along with on its Direct Isa, Direct Saver, Income Bonds and Investment Account.
In contrast, opposition RCI Bank has now topped the easy-access account tables for 45 weeks.
Its Freedom Savings Account, released a year ago today, pays a market-leading 1.45 percent on 100 and above, although it is just available online. Susan Hannums, cost savings specialist Savings Champion, states: Challenger banks have actually brought desperately needed competition to the savings market. Virgin Money, Tesco Bank and Post Office Money all hiked their cost savings rates in reaction to the launch of RCI, Hannums claims.
The impact was only brief as these challengers have likewise been cutting rates in recent months, as the possibility of a Bank of England base rate hike declines even further.
Last September, Tesco Bank was paying 1.60 per cent on easy access, today it’s a good idea just 1.21 percent. Likewise, Post Office was paying 1.61 percent, today its Online Saver account pays just 1 percent. This implies that Renault-owned RCI Bank continues to offer the leading easy-access rate and chief executive Steve Gowler says: The high-street banks require greater competition as new entrants drive better rates for savers.
Numerous savers beware about leaving their money with unknown oppositions, despite the fact that the majority of offer precisely the same level of protection as the big names. The key is to inspect whether your chosen bank is managed by City watchdog the Financial Conduct Authority and comes under the defense of the UK Financial Services Compensation Scheme (FSCS) which safeguards the first 75, 000 of your cost savings if your bank fails.
RCI does not have a UK banking license, which indicates if it folds you need to look for compensation from the French depositor security plan, which offers 100,000 of cover, presently worth 77,840. However, the prospect of seeking payment abroad in the not likely occasion of a banking collapse will prevent some savers. Fidor Bank is licensed in Germany, Triodos in the Netherlands and Handelsbanken and Ikano, set up by the household who founded IKEA, in Sweden.
Other foreign-owned challengers such as the State Bank of India are covered by the FSCS. Charlotte Nelson, finance expert at MoneyFacts.co.uk, says the newer kids on the block are the place to choose higher savings rates. Opposition banks continue to defeat their high-street rivals and keep their hold on the best-buy tables.
She states high-street banks now pay on average less than half the rate paid by oppositions. The average high street easy access account now pays simply 0.44 per cent, while the typical opposition pays 0.92 per cent. Similarly, the average one-year fixed-rate bond on the high street pays 0.92 percent, versus 1.42 percent from the challengers. Nelson says: The slow desertion of a few of the UK s most widely known brand names from the best-buy charts is stunning.
The huge banks no more require savers money to fund their loaning, whereas oppositions have to work harder to get savers attention. The very best method to do that is by providing appealing cost savings rates, she says. For instance, Fidor provides a two-year bond paying 2.20 percent on 100 and above, while Ikano pays 1.85 percent on 1,000.
On the high street, Nationwide pays 1.25 percent on 1, while Lloyds Bank pays simply 0.8 percent on 2,000. Nelson adds: High-street carriers are using savers hesitation to change accounts to their advantage and are pulling back from active competitors. However, savers must vote with their feet and go with the much better rates offered by oppositions.