Building societies are consistently beating the banks when it comes to the rates being offered to long-suffering savers, with variable rate Isas offered by banks falling a massive 47% on average in the last five years.
Despite no movement in the Bank of England base rate, rates on these types of Isas from banks have fallen from 1.72% to just 0.91% on average, while building society rates have fallen less steeply from 1.72% to 1.25% on average, according to research from Savings Champion. Interest paid on easy access accounts have also fallen over the same period, with banks reducing these rates on average by 36% from 0.91% to 0.58%, while building society easy access accounts have dropped from 1.03% to 0.83% on average at the end of last year.
Just over three quarters of building society accounts pay rates high enough to beat the base rate, while just over half of accounts at the banks can make the same boast.
Susan Hannums, director at independent savings advice site Savings Champion, said: “Building societies and challenger banks continue to show their support to savers in the form of better rates. While the challenger banks work to entice new savers, the building societies work to keep their existing ones. The challenger banks are bucking the trend and without them the bank’s figures would be even worse!
“It is clear that the traditional banks have little interest in encouraging existing or new savers to put more money with them, as the rates on offer continue to fall dramatically despite no movement in the Base Rate. For those savers who have an account with a traditional bank, it would be worth seeing how much better off they could be by switching.”
Ms Hannums added: “Talking about average rates gives a good indication of the direction banks and building societies are going, but it is important to look closely at what the best rates on offer are at any given time, and get them. This does not have to be a chore; it is one of the reasons we developed our Rate Tracker to help make this process easier.
“People should vote with their feet and get a better deal for themselves, because one thing is for sure, if you are waiting for you bank to help you, you will be waiting for a very long time.”