- 77% of building society variable rate accounts pay more than base rate, compared to 55% of banks
- Bank variable rate ISAs have seen interest rates nearly halve in five years
- Bank easy-access account rates down by more than a third in five years
- Average variable rate paid by building societies is 1.19% compared to 0.88% on similar accounts by banks
Building societies are consistently offering better value to long-suffering savers than their banking counterparts, as rates continue to fall despite no movement in the Bank of England Base Rate.
Savers holding variable rate ISAs with banks have seen their interest rates fall by a massive 47% in five years, down from an average of 1.72% to just 0.91%, while building society rates on the same products have fallen from 1.72% to 1.25% on average.
Those with easy-access accounts have also seen significant falls, with bank customers seeing their rates down by more than a third (36%) from 0.90% to 0.58% on average. Building society rates on these accounts have also fallen, but far less steeply from 1.03% to 0.83% at the end of last year.
Overall, building societies have more than three quarters (77%) of their accounts paying more than the Base Rate, compared to just 55% of bank accounts, a disparity which is remarkably similar to last year’s data collated by Savings Champion. On average, banks will pay their customers 0.88% in interest, while building societies pay an average of 1.19%.
Susan Hannums, Director at Independent Savings Advice site Savingschampion.co.uk says: “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!
“However, 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.”
For example, the top variable rate Isa is currently with Teachers Building Society, and its Cash ISA Notice 90 Issue 5 is paying 1.5%, way ahead of the bank average of 0.91% and higher even than the average building society average rate on these products of 1.25%.
Susan 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.”
For more information about the UK Savings market visit Savings Champion