Is your bank short-changing you?

Savers are still getting let down by high street banks, according to our analysis.

Despite the Bank of England (BoE) holding the base rate steady at 5.25% in June for the seventh consecutive committee meeting, our research shows that rates across the savings market have either stagnated or declined since January.

The major high street banks in particular continue to short-change savers with paltry rates, seemingly undeterred by repeated warnings from MPs and the Financial Conduct Authority (FCA).

Below, we detail our findings and explore how rates have changed over the past six months.

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Mind the savings gap

The overall picture for the savings market in 2024 has been largely one of stagnation – instant-access rates averaged 3.15% in January and edged down to 3.12% in June.

However, if we take a closer look, we can see that the main high street banks have performed worse than their building society and challenger bank competitors. 

In January, the major banking brands paid an average of just 1.9% on their instant-access accounts, while building societies were averaging 2.9% and challenger banks 3.3%. 

By June, average rates across the major banks had dropped to 1.6%, while average rates across building societies and challenger banks were unchanged.

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Big banks uncompetitive over the long term

As part of our latest research, we also ranked every provider's best instant-access rate against one another each day between 1 January and 3 June. 

For every day during this period we can see the performance of every bank and building society in the UK and compare them against each other. This gives us a much better understanding of how each provider has performed across this period, as opposed to simply taking a one-day snapshot view.

Our results found most of the major banks languishing in the bottom regions of the market for the entirety of the period we analysed. 

For example, Lloyds Bank had an average rank of 90 out of a field size of 92 – the worst of any of the major banks. Its Easy Saver account paid just 1.4% across the entire period in question.

Instant-access accounts for many other leading brands didn't do much better. Halifax's average rank was 86, Barclays averaged 84, Santander 82, Co-operative Bank 80 and HSBC 76.

• Find out more: Best savings accounts 2024 

Instant-access bank rankings between January 1 and June 3 

Elusive exclusive rates

Despite the overall disappointing rates, there were instances of table-topping rates on the high street. Ulster Bank Loyalty Saver currently offers 5.2% (subject to holding a qualifying current account), while Santander briefly offered 5.2% earlier this year.

You’d need to be lucky with your timing – or prepared to switch your current account – to access exclusive savings rates. You may get a better rate if you’ve been a customer for several years, if you’re willing to open other types of accounts, or if you’re happy to leave your money untouched.

For example, Nationwide offers an 18-month fixed account paying 5.5%, but only if you’re a customer who had a mortgage, savings or current account with it on 22 May – and still have one. Barclays Blue Rewards Saver account pays 3.5%, but only for its Blue Rewards members or Premier Banking customers. A lower rate is paid if withdrawals are made.

• Find out more: Best cash Isas 2024

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More cuts around the corner

Although the BoE held rates steady at the most recent meeting of the Bank's Monetary Policy Committee (MPC), two committee members broke rank to vote for a rate cut.

Swati Dhingra, one of the two MPC members in question, was recently quoted saying the BoE needs to 'stop squeezing living standards' and cut interest rates, fuelling speculation that rate cuts are just around the corner.

It’s telling that the best savings rates on the market are offered on shorter-term fixed accounts rather than long-term fixes – providers are reluctant to give savers the opportunity to lock in high rates when a BoE rate cut may be imminent.

You can also expect to see cuts to instant-access rates when the BoE does slash the base rate. Previous Which? analysis found that banks are quick to pass such rate cuts along to their customers.

• Find out more: Cash Isa rules and allowances

What can savers do?

When we put our findings about the big banks’ poor rates to the FCA, it told us: ‘We are continuing to look closely at the value firms provide to their customers.

‘Since we launched our cash savings action plan last year, we have seen a more competitive savings market. The latest data shows there were 171 easy-access products offering 4% interest or more.

‘We encourage savers to shop around for the best deals.’

This last point is key, because more than a third of savers are still keeping their cash with their usual high street bank, according to research from Hargreaves Lansdown. 

Similarly, figures from the BoE show that 13% of our savings are in accounts paying no interest at all. Regularly shopping around for the top rates is the best way to ensure your money is working for you. 

And by voting with your wallet, you send a message to the banks that you refuse to put up with miserable rates.

How to get a top instant-access rate

1. Low effort - Find the highest-paying account and and stick with it for the whole year. The risk is that your rate will go down in the meantime – unlike fixed accounts, rates on instant-access accounts can change at any time.
2. Medium effort - Use a savings platform. These websites work with multiple savings providers, so you can manage several accounts with one login. They sometimes offer exclusive accounts. The platform won’t cover the entire market, so better rates may be available elsewhere.
3. High effort - Carry out monthly checks to see which providers are offering the best rate. The downside is that it can be very time-consuming to constantly monitor the market and shift your savings from one provider to another. Save time with our best savings accounts guide, which is updated each week.