A week on from the Bank of England increasing interest rates, major banks are yet to offer better deals to their savings account customers.
Last week, the base rate was increased for the first time in a decade – rising from an historic low of 0.25% to 0.5%.
In theory, this marked good news for struggling savers, who had been hard pressed to find decent returns on their cash in recent years.
Early indications show some of that optimism may have been misguided, however, as banks continue to drag their heels in passing better deals on to customers.
How does the base rate affect savings?
While the base rate represents the rate at which the Bank of England lends to commercial banks, it also influences the rates that high street banks offer borrowers and savers.
In the last few years, borrowers have enjoyed historically cheap mortgage deals, while savers struggled to find accounts that could match inflation.
Indeed, the average easy-access savings account pays just 0.35% in annual interest, and some banks offer as little as 0.01%, according to the BBC.
Which banks are offering the best deals?
This means that a base rate increase should be good news for embattled savers – but in reality, little has changed.
Some banks have announced increases to their variable rate deals, but they’re very much in the minority.
Many of the biggest high street names initially claimed that their policies were ‘under review’, although Lloyds Banking Group and RBS Group have now announced that they’ll be increasing rates by up to 0.2% – so not passing on the full rate rise.
HSBC has yet to reveal how much of the rate rise they’ll be passing on to savers but changes are expected by December 1st.
The table below gives details of the banks that have so far confirmed that they will pass the base rate increase on to their variable rate customers, either immediately or from December.
|Aldermore||Variable rates up 0.25%|
|Barclays||Variable accounts up to 0.25%|
|Coventry||Variable rates up 0.25%|
|Clydesdale & Yorkshire||Accounts tracking base rate up 0.25%|
|Family Building Society||Some accounts up 0.25%|
|Halifax||Variable rates up to 0.2%|
|HSBC||Variable rates up to 0.25%|
|Lloyds Bank||Variable rates up to 0.2%|
|Nationwide||Accounts affected by the cut in Aug 2016 up 0.25%|
|NatWest||Variable accounts up to 0.2%|
|Newcastle||Some accounts up 0.25%|
|National Counties Building Society||Variable rates up 0.25%|
|NS&I||Variable accounts up 0.25%|
|Royal Bank of Scotland||Savings rates to increase by average of 0.20%|
|Santander||0.25% if account holds £40,000 or more|
|Skipton||Rates up 0.25%|
|TSB||Most variable accounts up 0.15%|
|Virgin Money||Rates up 0.25%|
|West Bromwich Building Society||Accounts tracking base rate up to 0.25%|
|Yorkshire Building Society||Variable savings rates up 0.25%|
- Find out more: how to find the best savings account.
Should you move your savings elsewhere?
If your bank hasn’t been forthcoming in offering you a better deal on your savings, you can hang on or consider moving your cash elsewhere.
The table below from Which? Money Compare shows the best deals currently available by initial interest rate for instant access and fixed-term savings. These are the accounts that come with no restrictions and are available to anyone in the country.
|Account type||Bank||AER||Minimum initial deposit||Maximum saving amount|
|Instant access||RCI Bank*||1.3%||£100||£1m|
|Instant access||BM Savings||1.3%||£1||£10m|
|One-year fixed||Atom Bank||1.95%||£50||£100,000|
|Two-year fixed||Axis Bank||2.05%||£1,000||£250,000|
|Three-year fixed||Atom Bank||2.25%||£50||£100,000|
|Four-year fixed||Ikano Bank**||2.36%||£1,000||£1m|
|Five-year fixed||Atom Bank||2.45%||£50||£100,000|
[UPDATE] This article was updated following announcements from Barclays,Halifax, Lloyds, NatWest and Santander that they would not be passing on the full rates rise to customers.
*This account isn’t protected by the FSCS, but deposits up to EUR 100,000 are protected by the French deposit protection scheme (FGDR).
** This account isn’t protected by the FSCS, but deposits up to £85,000 are covered by the Swedish Deposit Insurance Scheme.
- If you’re thinking of switching to get a better deal, you can find helpful advice on finding the right account for you in our switching your savings account guide.
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.