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More than a quarter of savings accounts fail to beat 0.75% Bank of England base rate

 

Just before the base rate was increased in August, 74 per cent of the savings market beat the base rate at that time of 0.5 per cent, according to Moneyfacts’ analysis.

 

But when the base rate rose to 0.75 per cent, the proportion of savings accounts beating it fell to two-thirds (66 per cent).

Moneyfacts said that, after six months of recovery, the market is reaching pre-rise levels, with 72 per cent of savings deals beating the base rate.

But there is still room for improvement, with over a quarter (28 per cent) of deals failing to beat 0.75 per cent, it said.

Rachel Springall, a finance expert at Moneyfacts, said the choice of savings products has also increased over the past six months, rising by 141 deals to stand at 1,329.

 

She continued: “Despite more choice for savers, the number of products that do not beat 0.75 per cent today still accounts for more than a quarter of the savings market, which highlights the necessity to revisit any variable rate accounts that may have been overlooked since the rate rise, as consumers could be earning less than they think.”

 

She suggested savers looking for a higher rate may want to consider newer challenger banks, which are tempting customers to switch with higher rates.

She said: “The cost of convenience – leaving deposits languishing in poor-paying accounts – should not be ignored, especially as rates can be as low as 0.10 per cent.

“Consumers must therefore not rely on Bank of England rate rises to improve the market instantaneously, as it may take a while for providers to pass any rise on.

“Simply put, savers are likely to secure a better return if they switch, and the challenger brands should use this fact as an opportunity to entice new customers.”

 


Published in: February Newsletter

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