While we’ve all been making the most of investment opportunities to fight inflation, our cash savings have had little joy. But, with the base rate now at 5%, is it time for banks to start playing fair?
This week, the city watchdog stepped in asking banks to explain the disparity between savings and mortgage rates – but we’ve yet to see real action from the high street giants.
The banks are having a right old laugh at cash savers. When the base rate goes up, ping goes your mobile phone – a text message alerting you that your mortgage rate is about to go up.
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And while some banks are upping their savings rates, you may have to dig around for the best ones, as the ones giving you the best rates are not your traditional high street players.
Unfortunately, most people do not look beyond the traditional banks – and why would you? Most of us have banked with them from around age 18 and we expect them to serve us well.
But, the reality is, they are not serving savers – and if you still hold cash with them, then you could be missing out on hundreds of pounds in interest.
HOW MUCH INTEREST IS MY BANK PAYING?
Here’s what the big players are paying on basic savings accounts:
Rates are higher if you're willing to tie yourself to some terms and conditions – for example, if you agree to fix your cash for 12 months, limit how much you can save each month or make limited withdrawals.
For example, First Direct will give you a handsome 7% on a regular savings account, but it will only allow you to save up to £300 a month and this rate is only available for cash up to £3,000 – not massively rewarding if you have a large sum to save.
WHERE CAN I FIND THE BEST SAVING RATES?
To take advantage of the best rates, you will have to do your homework.
The best rates are most likely to be with banks you may have never heard of – for example:
Now the simple solution is just move your money – far too many people still have cash in account with poor rates, suffering savings inertia.
But, there is a bigger question – why are banks still getting away with rates well below the base rate?
Work and Pensions Secretary Mel Stride acknowledged there are “questions to be asked” after months of the Bank of England steadily increasing interest rates in a bid to tackle inflation. While mortgage holders and borrowers suffer pretty much instantly, savers do not benefit with rate rises as banks have done little to pass on increases. And while they are under no such obligation to, can 0.85% (Santander) be justified?
Chancellor Jeremy Hunt has also been in conversation with banks to do better.
But until changes happen, move your money. While we may not be looking at inflation busting rates, you can make your cash work harder for short term savings and emergency holdings.
It really is time to make a stand, and stop the savings rip-off by shifting your cash where it can make you something back.
