A Beacon of Hope in UK Savings Market

By: MoneyFacts

Thanks to dismal savings rates, savers can be forgiven for thinking that there is little to gain from switching savings accounts away from familiar high street providers. However, research from Moneyfacts.co.uk can reveal that this is not the case and that savers would actually be able achieve far better rates of return from the newer kids on the block.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:        

“Despite savings rates falling across the board, challenger banks continue to trump their high street competitors and maintain their hold on the best buy tables. Indeed, the worst easy access account offered by high street providers now pays just 0.05%, so it’s not surprising that the average easy access account offered by high street banks pays a significant 0.48% less than the average rate paid by challengers.

“The slow desertion of some of the UK’s most well-known brands from the best buy charts is shocking and has significantly impacted savers’ returns as a result. It all boils down to the fact that these providers simply do not need savers’ money to fund their borrowing. However, as challenger banks are still relative newcomers to the market they need to get savers’ attention, and the best way to do that is by offering attractive savings rates.

“One of the biggest hurdles challenger banks face is getting savers to trust their brand. But there really isn’t any reason to fear the unfamiliar for the majority of challenger banks have a UK banking licence and some have already become well-established.

“High street providers are using savers’ reluctance to switch accounts to their advantage and are backing away from active competition. However, savers should vote with their feet and opt for better rates provided by challengers. For instance, the best two-year fixed rate bond from a high street provider pays just 1.25% yearly, but savers could earn 2.20% by opting for a challenger brand.

 “In today’s dismal savings landscape challenger banks offer savers a beacon of hope and the opportunity to secure a market-leading deal. And with loyalty no longer being rewarded by more familiar providers, now is the time for savers to muster the will to reject poor returns and change account.”

*’High street providers’ refers to the biggest providers on the market with the largest number of branches (Bank of Scotland, Barclays, Halifax, HSBC, Lloyds Bank, Nationwide Building Society, NatWest, Royal Bank of Scotland and Santander).

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