January 13, 2020 3:23:30 PM
Savers may find they receive better returns if their money is held in a building society rather than a bank, analysis suggests.
More than two-thirds (67%) of building society accounts pay a higher rate than the Bank of England base rate which is currently 0.75%, compared to just over half of accounts from banks (51%), research from website Savings Champion found.
It looked at variable rate accounts including easy access deals, notice accounts, children’s deals and cash Isas to make the findings.
Over the last 12 months, the overall average variable interest rate paid by building societies was 1.07%, compared with 0.84% from banks, the website found.
Anna Bowes, co-founder of Savings Champion, said: “When it comes to the average rates, there is a clear disparity between the two groups.”
She said plenty of providers within both groups buck the overall trend, with challenger banks in particular often offering competitive deals, so savers should still look around for the best options offered by individual providers before taking action.
Last week, the Financial Conduct Authority (FCA) proposed that savings providers should have to set a single rate across their easy access accounts.
Under the proposals, which are subject to consultation, firms would still have the flexibility to offer multiple introductory “teaser” rates for up to 12 months to attract customers.
The new single rates would kick in after accounts have been open for 12 months, at the latest – with the aim of helping long-standing savings customers who often end up on low rates which are gradually whittled down by savings providers.
Mr Bowes continued: “There are competitive rates to be found, so savers must not accept paltry returns, instead switch to a better-paying alternative without delay.
“If your provider does not reward your loyalty, then don’t stand for it.”