UK

The four banks paying just 0.01pc on savings accounts

Four banks are still paying out rock-bottom savings rates despite a succession of rate rises by the Bank of England over the past five months.

Barclays, the Government-backed National Savings & Investments, Allied Irish Bank and Citibank UK are still offering just 0.01pc interest on certain easy access accounts, according to analyst Moneyfacts.

This is despite the Bank of England raising base interest rates to their highest level since 2009. The Bank Rate is now 1.25pc after rising by 0.25 percentage points.  

Banks have left savers exposed to rampant inflation by neglecting to pass on higher interest rates. The Bank of England has forecast inflation to climb to 11pc this year, the highest rate in almost four decades.

It means a saver with £10,000 in an easy access account paying 0.01pc would accrue just £1 of interest over the course of a year. But the real value after 11pc inflation had eroded the pot would be £9,010 – a loss of £991, according to analyst Savings Champion.

Anna Bowes, of the company, said: “After less than seven years your money will have halved in value. It would be worth £4,820 after seven years, a loss of £5,187. It’s really scary stuff.”

No accounts come close to matching the current 9pc rate of inflation.

Sarah Coles, of stockbroker Hargreaves Lansdown, said: “The biggest issue is banks have so much cash at the moment after so many people deposited savings during lockdowns, and while it remains that way they have no incentive to increase rates.

“So savers really can’t be lulled into a false sense of hope, they really need to move for a better rate.”

None of the high street banks have passed on all four Bank Rate rises to customers.

A spokesman for Barclays said the bank was currently reviewing its savings rates in light of yesterday’s Bank of England decision, while an NS&I spokesman said it regularly reviewed its rates and recommended changes to HM Treasury “it believed were appropriate”. Allied Irish and Citibank UK did not respond to requests for comment.

File source

Tags
Show More

Related Articles

Back to top button
Close