MPs have complained that the big banks do not pass on hikes in interest rates to savers, despite moving swiftly to do so for mortgage costs
Fresh pressure was placed on big UK banks today over the insignificant savings deals they offer despite a surge in interest rates in the last year.
MPs and others have complained that the big banks do not pass on hikes in interest rates to savers, despite moving swiftly to do so for mortgage costs.
Rates have increased 14 times in a row since December 2021 as the BoE tried to get inflation down to its target of 2 per cent.
October inflation rates were 4.7 per cent down from 6.3 per cent in September.
Figures today from personal finance comparison site finder.com and money app Plum reveal that the interest rates offered on easy access savings accounts by some of the biggest banks in the UK are considerably lower than in many other countries when compared to the local base rate despite the UK having a higher base rate.
The average interest rate offered by five of the UK’s largest banks is only 1.6 per cent. This is below a third (31 per cent) of the current base rate, as set by the BoE, which was held at 5.25 per cent on Thursday.
The City expects that with inflation now seemingly under control, Bank base rates are likely to decline from here, definitely from next year.
Finder.com’s UK & US CEO, Jon Ostler, said: There have been a growing number of organisations and politicians calling for the UK’s top banks to pass on higher interest rates to customers and this research will only add to this clamour. Even if the UK was towards the top of the global comparison table it would not be acceptable, nevertheless our banks are offering significantly lower interest rates vs. the base rate than all but one of the European countries we looked at.
As a consumer, there are a few things you can do to combat low interest. There are savings and investment platforms that offer much better savings rates on products that are regulated by the Financial Conduct Authority. You can also take advantage of a range of generous switching offers from the big banks, which can help make up for the lower interest you will earn, Ostler said.
Plum’s CEO and Founder, Victor Trokoudes, said: While the UK’s big banks have been quick to raise interest rates on loans and mortgages, they have been far slower in raising interest rates on savings accounts, effectively devaluing people’s hard-earned savings.