High street banks shortchanging savers by hundreds of pounds a year with unjustifiably low savings rates, Which? deep dive analysis finds

Meagre savings rates offered by high street banks are shortchanging customers by hundreds of pounds every year compared to deals from challenger banks, Which? analysis of rates stretching back three years has found. 

The consumer champion’s in-depth research looked at six types of accounts: instant access savings accounts and Isas; one-year fixed-rate savings accounts and Isas and five-year fixed-rate savings accounts and Isas. Deals from banks were only included if they were available to customers for at least 12 months within three years. 

For instant access accounts, Barclays finished joint-bottom of the pile. Its ‘Everyday Saver’ account paid a paltry average of just 0.1 per cent between January 2020 and March 2023. It’s joined by Lloyds Bank for its ‘Easy Saver’ and Hodge Bank for its ‘No Notice’ account, which also paid an average of just 0.1%.

Lloyds also came in the bottom three for rates offered on instant-access Isas. Its ‘Cash Isa Saver’ paid an average of just 0.13 per cent during the period we looked at. The Danish bank Danske and Nationwide came below Lloyds, both offering a measly average rate of 0.08 per cent. 

The gap between traditional high street lenders and challenger banks and building societies was widest when it came to instant-access savings accounts. Challenger banks paid an average rate of 0.57 per cent over the three-year period, while building societies paid 0.42 per cent. High street banks, on the other hand, averaged a paltry 0.16 per cent.

Some of the best performing providers in our analysis may be names many consumers have not heard of before. Private bank Brown Shipley came top for one-year fixed savings accounts, averaging 2.71 per cent (its account is offered through savings platform Raisin). Brown Shipley came third for instant-access savings, averaging an impressive 1.32 per cent. 

Saga and Gatehouse Bank topped the pile when it came to instant-access Isas, offering average rates of 1.49 per cent and 1.25 per cent, respectively. 

Despite the competitive rates on offer, challenger banks have struggled to prise customers away from bigger and more established names. According to Hargreaves Lansdown, a third (32%) of people thought that interest rates were too low to bother switching banks, while almost one in ten (7%) mistakenly thought that high street banks are safer.

However, the consumer champion’s analysis shows that, looking at rates today, savers could earn £312 more over a year (£382 vs £70) on a £10,000 deposit by putting their money in the market-leading instant-access account, offered by Chip, compared to Barclays’ Everyday Saver. Based on a £1,000 deposit, you’d earn £31.20 more (£38.20 vs £7).

The findings come as the Treasury Select Committee wrote to high street banks to ask them what proportion of their interest rate rises are passed on to their savings customers. 

Which? believes such measly rates are unjustifiable, particularly at a time when borrowers are being hit with higher interest rates. 

The Financial Conduct Authority (FCA) also wrote to high street banks asking them to justify their lower savings rates, and threatened to take ‘onerous interventions’ if firms could not justify passing on interest rates. 

The FCA’s new Consumer Duty that will be introduced in July will encourage firms to give fair value to customers, and Which? would encourage the regulator to act quickly in this space should firms fall short of requirements. 

Jenny Ross, Editor of Which? Money, said: 

“With millions of consumers still feeling the impact of an unrelenting cost of living crisis, it’s become even more important to get better returns on savings accounts. Yet, our research shows that established high street banks are shortchanging customers by potentially hundreds of pounds a year. 

“If the FCA’s Consumer Duty is worth the paper it’s written on, the regulator will clamp down heavily on firms offering unjustifiable savings rates. 

“Our advice is simple: if you’re not satisfied with the rates you’re currently receiving, now’s the time to switch.”


Notes to Editors 

  • Analysis of savings rates is based on data provided by Moneyfacts and covers the period from January 2020 to March 2023. The type of accounts analysed were: instant-access savings accounts and Isas; one-year fixed-rate savings accounts and Isas; and five-year fixed-rate savings accounts and Isas. 
  • Rates from the first day of each month were used to calculate an average rate for each account category and individual provider. Each bank’s best rate was used. Deals which were not available to customers for fewer than 12 months within the timeframe analysed were not included. All rates are based on a deposit of £10,000 (unless otherwise stated). 
  • The Treasury Select Committee’s letter to high street banks 


About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians andlawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

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