More than a quarter of savings deals on market ‘fail to beat 0.75% base rate’
The savings market has taken a full six months to price in last August’s Bank of England base rate increase, according to analysis.
Nearly three-quarters (72%) of savings deals on the market, including Isas, beat the current base rate at 0.75% – meaning they pay a rate of 0.76% or more – Moneyfacts.co.uk found.
This is approaching similar levels to the proportion of savings accounts beating the base rate just before it was increased from 0.5% to 0.75% in August 2018.
Moneyfacts said savers hoping to see their interest rates increase should not just rely on base rate rises being passed on by savings providers.
They should shop around and see if they could get a better deal elsewhere, it said.
Just before the base rate was increased in August, 74% of the savings market beat the base rate at that time of 0.5%, according to Moneyfacts’ analysis.
But when the base rate rose to 0.75%, the proportion of savings accounts beating it fell to two-thirds (66%).
Moneyfacts said that, after six months of recovery, the market is reaching pre-rise levels, with 72% of savings deals beating the base rate.
But there is still room for improvement, with over a quarter (28%) of deals failing to beat 0.75%, it said.
Rachel Springall, a finance expert at Moneyfacts, said the choice of savings products has also increased over the past six months, rising by 141 deals to stand at 1,329.
She continued: “Despite more choice for savers, the number of products that do not beat 0.75% today still accounts for more than a quarter of the savings market, which highlights the necessity to revisit any variable rate accounts that may have been overlooked since the rate rise, as consumers could be earning less than they think.”
She suggested savers looking for a higher rate may want to consider newer challenger banks, which are tempting customers to switch with higher rates.
She said: “The cost of convenience – leaving deposits languishing in poor-paying accounts – should not be ignored, especially as rates can be as low as 0.10%.
“Consumers must therefore not rely on Bank of England rate rises to improve the market instantaneously, as it may take a while for providers to pass any rise on…
“Simply put, savers are likely to secure a better return if they switch, and the challenger brands should use this fact as an opportunity to entice new customers.”