Building societies continue to outperform banks as over 73% of building society accounts pay a higher interest rate than the base rate, compared to only 54% of accounts held with banks.
There are other key areas in which building societies are outshining banks. For instance, over five years, the average rate for a live variable account from a bank has dropped by more than double the average for live building society accounts.
We have also seen that the average variable rate from a bank has dropped by over 6% more than the average building society rate over the last six years. And that for the last 12 months, building societies paid their customers 0.92% on average, compared to just 0.69% paid by banks.
The Bank of England base rate remains at 0.50% - a low level that many savers would expect the return on their savings accounts to beat.
Despite this expectation, significantly more building society accounts (73%) pay a higher rate than the base rate, compared just over half of accounts from banks (54%).
And low rates are not just to be found in providers' back-books. Over five years, the average rate for an available to open variable account from a bank has dropped by more than double the average for live building society accounts - a 36% drop, as opposed to 17%.
Over the last 12 months the overall average variable interest rate paid by building societies is over 33% higher than the banks, showing a clear gap between the two groups.
Whilst rates on the whole are, of course, lower than they were six years ago - as savers continue to struggle in a low-interest savings environment - the average variable rate paid by banks has dropped overall by over 6% more than the average rate paid by building societies.
Tom Adams, Head of Research, said: “What these figures clearly demonstrate are that, as a group, building societies pay higher rates on average, drop rates by less and are therefore treating savers more fairly than banks".
However, the figures are taking a look at the overall picture, so of course you can drill down and see that there are plenty of examples of providers within each group that are bucking the trend.
The newer breed of challenger banks are clearly an exception to the rule, as many of these providers are actively competing in the savings market and in many cases dominating the best buy tables.
On the flip side, dragging the overall figures down as usual are the big high street names, which pay some of the worst rates on the market. Despite this, many savers still hold significant sums with their high street bank and these figures should be a wake-up call for them to move their funds to a better alternative as soon as possible.
Adams adds "Savers should keep an eye on the best rates and grab them while they can - don't accept paltry interest rates and instead switch to a better alternative now. If your provider does not reward your loyalty, show them a clean pair of heels and move your money away".
Our Bath based savings experts are on hand if you would like any help with your savings, so why not give us a call on 0800 011 9705, we’d love to hear from you.
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