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Savers lose up to £ 7bn in interest if they stick with big banks


Savers lose up to £ 7 billion in interest premiums if they stay with the big banks.

While smaller banks and building societies have raised interest rates for the time being, large banks continue to pay practically no interest.

However, money flowed into the latter as savers put more money aside for an uncertain future.

You now need a £ 50,000 deposit to find an account with a high street bank where inflation will not undermine your savings, despite hitting a four-year low last week.

Low point: while smaller banks and building societies have temporarily raised interest rates, large banks continue to pay practically no interest

Earlier this month, banking trading organization UK Finance announced that the amount of easy-to-access accounts increased 6 percent in the second quarter of the year. This is the largest increase since records began ten years ago.

In the first six months of this year, savers piled up with a huge £ 55.9 billion.

The major banks – including NatWest, Lloyds, Barclays, Royal Bank of Scotland, HSBC, Halifax and Santander – hold a total of £ 726 billion of our savings in easily accessible accounts. They pay interest at a rate barely above zero, 0.01 percent to loyal savers – or 10p a year for £ 1,000.

By switching to better offers of 0.75 to 1 percent, British savers can increase their overall interest by up to GBP 7 billion.

Big bank savers are also losing the purchasing power of their money, although inflation is now at its lowest level in nearly five years.

Meanwhile, the rise in the cost of living, as measured by the consumer price index, is only increasing by 0.2 percent.

None of the big banks comes close to this low rate of inflation – unless you have £ 50,000 in the NatWest Premium account or open a new Digital Regular Saver.

She cut the rate on her Premium Account last month from 0.35 percent to 0.2 percent for amounts between £ 50,000 and £ 1 million. For smaller amounts, the rate is 0.01 percent.

The new Digital Saver, which is only open to those who have a checking account with the bank, pays 3 percent and offers easy access to your money. However, you can only enter a maximum of £ 50 per month.

It is important that your money is making more than inflation – if you don't, it will lose its value. With 0.2 percent inflation, you need to earn £ 20 in interest for every £ 10,000 in savings per year. At 0.01 percent, you'll only make £ 1, so effectively losing £ 19 a year.

It is important that your money is making more than inflation - if you don't, it will lose its value

It is important that your money is making more than inflation – if you don't, it will lose its value

However, according to data analyst Moneyfacts, 81 easily accessible accounts are offered by other banks and building societies that are outperforming the rate of inflation.

Rachel Springall, a financial expert at Moneyfacts, said, “I think savers should look away from the high street banks as they pay next to nothing in interest.

"Challenger brands offer some of the best returns and are worth considering even if they are not household names."

Some large banks pay a little more than 0.05 percent, but the interest rate only lasts for a year.

For example, Santander's eSaver Edition 18 pays 0.05 percent, but only for the first 12 months. After that, 0.01 percent of your money will be transferred to the Everyday Saver account.

In contrast, Principality BS has just increased the rate on its Web Saver account for new savers to 0.8 percent, while Yorkshire BS Internet Plus Saver 7 pays 0.95 percent for as long as you have £ 10,000 in the account.

All of them give you easy access to your funds with no withdrawal restrictions.

Your money – up to £ 85,000 – is backed by the financial services compensation system so you won't lose if the bank or building society gets into trouble.

Savers who want to put money aside each month can earn 1 percent of their future savings.

Virgin Money Regular E-Saver pays 1 percent and allows you to make withdrawals at any time. However, you can only save 250 euros per month.

In contrast to the new NatWest Digital Regular Saver, the account is open to everyone and not just the current account holders. The Virgin account rate is fixed for one year, while NatWest reserves the right to lower the rate at any time.

sy.morris@dailymail.co.uk

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