Savers looking to make the most of their money should consider a bank or building society that offers a minimum savings rate.
The city watchdog is currently investigating whether it should force providers to pay a basic savings rate to loyal customers.
The idea is to protect savers who end up earning a pittance because they fail to shop around regularly and compare accounts. But a handful of providers have already specified a minimum rate they will pay savers now.
Minimum savings rates: A handful of providers have already specified a rate they will pay now
Leeds Building Society, for example, has set a rate of at least 0.5 per cent on its ordinary easy-access accounts, or 0.6 per cent to savers who run their accounts online. It means an extra £75million in interest a year for savers.
Skipton BS is committed, for now, to paying a minimum 0.6 per cent on its accounts which are no longer on sale. It is three times the minimum savings rate of 0.2 per cent announced by NatWest last week.
Meanwhile, Coventry BS says 97 per cent of money in its accounts earn 1 per cent or more.
However, if the Financial Conduct Authority’s plan to bring in a basic savings rate goes ahead, savers will still have to do their homework to avoid missing out.
This is because firms will be permitted to set their own minimum rate. There will not be one rate that applies to the whole industry.
The 0.8 percentage point gap between what NatWest and Coventry BS pay would mean a difference of £800 interest on £10,000 over ten years.
One in three savers holds the same easy-access savings account for ten years or more, while 45 per cent have been in the same account for more than five years.
Yet loyal savers typically earn far less than those who switch accounts regularly.
This is because firms launch accounts with top rates to attract new savers, then remove them from sale. Or they launch a new issue of the same account at a different rate, and then chip away at the rate on the old account.
This gap between new and old accounts is expected to get wider as interest rates rise and providers look to make more money out of loyal savers.
A basic rate would make it easier for savers to see exactly what they are earning and, according to the FCA, lead to better rates for loyal customers.
If, for example, all savers who have been in their account for a year are moved into one basic rate account it would put pressure on providers to move rates up to a level where they keep switchers.
One basic rate would also mean savers don’t have to hunt through old accounts with the same or similar name to find their rate. Savers can no longer rely on providers passing on any rise in base rate in full.
Some firms have increased rates by a miserly 0.05 per cent compared with the 0.25 point rise in Bank of England base rate earlier this month. Some savers saw no increase at all.
Experts say this is the knock-on effect of the Bank’s so-called Funding for Lending and Term Funding schemes introduced from 2012 which lent banks and building societies money at rock-bottom rates. They have borrowed £150billion of this cheap money so had no need to woo savers.
Even though the schemes were closed earlier this year, savers are not out of the woods. Banks and building societies have up to four years to pay the money back from the date they borrowed it.
A handful of accounts already treat loyal savers fairly. You might not get the very best rate but they are not far off and you are saved the hassle of moving your money.
For example, internet bank Ford Money has a guarantee on its easy-access Flexible Saver to pay the same rate to all customers. It only has one account and one rate. If it moves its rate up to attract new savers, those already in the account will see the same rise. It pays 1.29 per cent on a minimum balance of £1.
The same guarantee applies to its Flexible Cash Isa where the rate is 1.17 per cent.
Investec Bank Easy Saver internet account works the same way paying 1.15 per cent, but there is a higher minimum investment of £25,000.
Neither banks operate complicated terms and conditions, such as limiting the number of withdrawals you can make each year or paying a short-term bonus which vanishes after 12 months.
Others ensure you will automatically see an increase when rates are on the way up.
Skipton BS Super Tracker and Super Tracker Cash Isa pay 1.27 per cent. They guarantee you will earn 0.52 points above base rate until June 30, 2020. But you are limited to two withdrawals a year. The account is available online, by post and through its branches.
The small Family BS has a Market Tracker Saver at 1.05 per cent and an Isa version at 1.01 per cent, available online, by post or through its Epsom branch. It resets the rate every three months with the next change due on October 1.
It pays the average of the highest 20 easy-access accounts.
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