Here we reveal which savings providers have offered the most and least competitive rates over the past three years.
Providers slow to pass on base rate increases
Our rate analysis covers a hectic period for savers, which began with the Bank of England (BoE) cutting the base rate to an all-time low of 0.1% in March 2020 – the start of the Covid-19 pandemic. This was designed to support the economy through a period of extreme market turmoil.
While the base rate increased by 1.25 percentage points between 1 December 2022 and 1 May 2023, the market average instant-access rate rose by just 0.63 percentage points, according to Moneyfacts.
Big banks lag behind
Looking at instant-access accounts over the past three years, Premier League sponsor Barclays put in a relegation-worthy performance, coming joint-bottom in our table.
The bank’s 'Everyday Saver' account paid an average of just 0.1% between January 2020 and March 2023. This was matched by Lloyds Bank's 'Easy Saver' and Hodge Bank's 'No Notice' account.
Lloyds also features in the bottom three for instant-access Isas – its Cash Isa Saver averaged just 0.13% during the period we looked at.
Bottom of the pile in this category were Danish-multinational Danske Bank and Nationwide. Both their instant-access Isas paid an average of just 0.08%.
Familiar names also appear at the wrong end of the table in other account categories. For example, Halifax came last for five-year fixed savings accounts (averaging 0.57%), while Royal Bank of Scotland came second last for one-year fixed Isa accounts (0.62%).
Most and least competitive providers for instant-access savings accounts
| Provider | Months product was available (Jan 2020-Mar 2023) | Average rate Jan 2020-Mar 2023 (%) |
|---|---|---|
| Zopa | 12 | 1.76 |
| Al Rayan Bank | 21 | 1.44 |
| Brown Shipley | 15 | 1.32 |
| Cynergy Bank | 15 | 1.23 |
| JN Bank | 15 | 1.21 |
| Ford Money | 16 | 1.16 |
| Marcus by Goldman Sachs� | 30 | 1.08 |
| Investec Bank plc | 31 | 1.06 |
| SAGA | 38 | 0.98 |
| Shawbrook Bank | 38 | 0.97 |
| Atom Bank | 29 | 0.97 |
| RCI Bank UK | 37 | 0.91 |
| Yorkshire Building Society | 38 | 0.9 |
| Kent Reliance | 37 | 0.88 |
| Tandem Bank | 36 | 0.87 |
| Charter Savings Bank | 35 | 0.87 |
| Hampshire Trust Bank | 24 | 0.85 |
| Plum | 23 | 0.84 |
| Tesco Bank | 38 | 0.81 |
| Aldermore | 36 | 0.8 |
| Scottish BS | 30 | 0.8 |
| National Savings & Investments | 38 | 0.8 |
| Coventry BS | 38 | 0.75 |
| Principality BS | 38 | 0.73 |
| Leeds BS | 38 | 0.73 |
| Family Building Society | 38 | 0.71 |
| Saffron BS | 38 | 0.7 |
| Loughborough BS | 15 | 0.68 |
| Paragon Bank | 38 | 0.68 |
| UBL UK | 15 | 0.67 |
| Skipton BS | 38 | 0.65 |
| Post Office Money� | 38 | 0.62 |
| Teachers BS | 38 | 0.61 |
| Sainsbury's Bank | 23 | 0.6 |
| Beverley BS | 35 | 0.59 |
| OakNorth Bank | 38 | 0.56 |
| AA | 38 | 0.56 |
| Buckinghamshire BS | 38 | 0.55 |
| Ecology Building Society | 38 | 0.55 |
| Newcastle BS | 38 | 0.54 |
| West Brom BS | 38 | 0.53 |
| Harpenden BS | 38 | 0.52 |
| State Bank of India | 38 | 0.51 |
| Bath BS | 13 | 0.5 |
| Cambridge BS | 38 | 0.45 |
| Penrith BS | 38 | 0.44 |
| Stafford Railway BS | 38 | 0.44 |
| Furness BS | 38 | 0.43 |
| Beehive Money | 27 | 0.42 |
| Punjab National Bank | 26 | 0.4 |
| Punjab National Bank (International) Limited | 12 | 0.4 |
| ICICI Bank UK | 38 | 0.39 |
| Union Bank of India (UK) Ltd | 38 | 0.38 |
| Santander | 38 | 0.34 |
| Triodos Bank | 38 | 0.32 |
| Chorley Building Society | 38 | 0.3 |
| Tipton & Coseley BS | 38 | 0.29 |
| Dudley BS | 38 | 0.29 |
| smile | 38 | 0.28 |
| The Co-operative Bank | 38 | 0.28 |
| Manchester BS | 32 | 0.28 |
| Darlington BS | 38 | 0.28 |
| Nottingham BS | 38 | 0.27 |
| Hanley Economic BS | 38 | 0.27 |
| Clydesdale Bank | 19 | 0.25 |
| Virgin Money | 38 | 0.25 |
| Yorkshire Bank | 19 | 0.25 |
| Metro Bank | 38 | 0.24 |
| The Melton BS | 27 | 0.22 |
| Bank and Clients | 12 | 0.19 |
| Leek United BS | 34 | 0.19 |
| Reliance Bank | 35 | 0.19 |
| TSB | 38 | 0.16 |
| HSBC | 38 | 0.14 |
| Birmingham Midshires | 13 | 0.13 |
| Nationwide BS | 38 | 0.13 |
| M&S Bank | 38 | 0.13 |
| Halifax | 38 | 0.12 |
| Ulster Bank | 38 | 0.12 |
| Bank of Ireland UK | 38 | 0.12 |
| Danske Bank | 38 | 0.12 |
| Scottish Widows Bank | 38 | 0.11 |
| AIB | 38 | 0.11 |
| Allied Irish Bank (GB) | 38 | 0.11 |
| Bank of Scotland | 38 | 0.11 |
| Lloyds Bank | 38 | 0.1 |
| Hodge Bank | 29 | 0.1 |
| Barclays Bank | 38 | 0.1 |
Challenger banks take up the gauntlet
Challenger banks and building societies beat the big high street banks for every type of savings account in our analysis, except five-year fixed-rate Isas. This was only because no high street bank offered a qualifying five-year Isa during the period we looked at.
The gap was particularly stark for instant-access savings accounts. Challenger banks paid an average rate of 0.57% over the three-year period, while building societies paid 0.42%. High street banks, on the other hand, averaged a paltry 0.16%.
High street banks’ rates eclipsed by challengers
Lesser-known providers topped the table in several savings account categories, with some repeatedly appearing in the top three.
For Isas, Castle Trust Bank and Secure Trust Bank both offered highly competitive rates. Castle Trust came second for one-year fixed-rate Isas (averaging 1.92%) and third for five-year fixed-rate Isas (2.26%). Secure Trust was in third place for one-year Isas (1.88%) and second for five-year Isas (2.37%).
Looking at rates today, you could earn £312 more over a year (£382 vs £70) on a £10,000 deposit by putting your money in the market-leading instant-access account (offered by Chip), compared with Barclays’ Everyday Saver.
Can you trust challenger banks?
Banks have to pass very stringent checks before they’re granted a banking licence in the UK.
How to maximise your returns
To take advantage of the best rates on the market, you typically have to commit to managing your savings online or via an app.
Many of the top challenger accounts in our research were online-only, including those from Brown Shipley and Castle Trust (but Brown Shipley did offer phone and postal access on some accounts).
Overall, we found that accounts without branch access paid better rates, on average, than accounts with branch access across almost all savings categories.
The average rate for instant-access savings accounts without branch access over the three-year period we looked at was almost twice that for accounts with branch access (0.64% vs 0.35%).
There was also a sizeable gap between one-year fixed savings accounts (1.41% vs 1.08%).
Accounts with branch access tend to pay lower rates
Isas vs savings accounts
Our analysis also confirms that you’re often better off with an ordinary savings account than with an Isa. Non-Isas outperformed Isas for one-year fixed-rate accounts (1.29% vs 1.13%) and five-year fixed-rate accounts (1.83% vs 1.68%).
However, Isas won out for instant-access accounts (0.57% vs 0.45%). This remains the case – the average instant-access Isa paid 2.26% in May, compared with 2.06% for instant-access accounts.
However you decide to squirrel away your money, keep a close eye on rates – and don’t be afraid to move your money to a provider offering a better return, even if you haven’t heard of it before.
source https://www.which.co.uk/news/article/revealed-how-high-street-banks-have-been-shortchanging-savers-for-years-aj4QX4x1Vf12