Unsurprisingly, most savings articles in the weekend press focussed on the unexpected fall in CPI inflation for March 2018 and therefore whether this would delay the Bank of England base rate rise which was expected in May.
However, the drop does mean that there are now some longer term fixed rate bonds offering rates that are greater then inflation.
And as Jeff Prestridge, Personal Finance Editor of The Mail on Sunday remarked,
“With rates fixed, these bonds could lose a little lustre over their life if the base rate continues to head up, pushing up savings rates. But with the Bank of England determined to get inflation down to 2 per cent, they could remain inflation busting for a big chunk of their life.”
The Mail on Sunday went on to highlight what we have been shouting about for a long time now – that the High Street banks are ripping off their customers – they say to the tune of £1 billion per year – because they are paying such poor rates of interest on their savings accounts.
HSBC responded by claiming that
“Our savings accounts are competitive”.
I think they need to look in the dictionary to see what that word means!
Elsewhere and on a slightly different tack, The Sunday Times reported on the delay of RBS to pay out a £775m giveaway to challenger banks – a move that is supposed to increase competition in the small business market.
At the moment RBS, Barclays, Lloyds and HSBC account for 80% of the small business market. Probably unsurprisingly there appears to be some reluctance to release the funds and arguments are breaking out about who qualifies to receive it.
Santander is apparently in the mix – I certainly wouldn’t call them a challenger bank, although some are saying that the giant has been included as it has the scale to really encourage customers to move.
The Sunday Telegraph reported the news that Lloyds Banking Group is cutting the rates to Club Lloyds and Bank of Scotland Vantage customers – they’ll see the rate drop from 2% to 1.50%. Interesting timing considering the expected increase in the base rate.
Update: 27 April 2017
The midweek press, unsurprisingly, covered the TSB scandal following its recent disastrous IT upgrade, leaving up to 2 million customers facing chaos.
And they have also highlighted how slow banks and building societies have been to pass on the Bank of England base rate rise to savers, whilst they were quick to pass the hike on to mortgage holders. No surprise there!
However, Barclays has been highlighted as the first major high street provider in a while to launch a competitive savings account.
Its 3-Year Flexible Bond pays 1.81% gross/AER, which while competitive among the high street banks, is easily outstripped by many others; RCI Bank* is currently paying the top rate of 2.31%.
And talking of lesser-known providers, The Daily Mail highlighted some of the newer providers to the savings market, Atom Bank, Ford Money, PCF Bank, Tandem Bank and Wyelands Bank – reminding readers that your money is safe as long as you stick within the Financial Services Compensation Scheme limits – assuming they are part of that scheme, or a European equivalent.
We’ll be back next week to report what the papers are saying.
*We are occasionally paid by some providers if you click through from our Best Buy Tables and open a savings or current account with them. We will never accept a payment that compromises in any way our independent, whole of market approach to providing information on savings products. For clarity we will indicate those companies who remunerate us with an asterisk (*).
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