23rd November 2015
While it seems the big High Street banks have forgotten about savers with multiple rate reductions building societies have used this to their advantage, by offering a local alternative to the mainstream players.
Research from Moneyfacts.co.uk has compared the savings offerings of building societies and banks and found that the former are the irrefutable winners, as is highlighted in the table below.
There is a stark difference between what savers could earn from a building society compared with a main bank according to the firm.
For example, the top-paying easy access account from a mutual, which comes from Skipton Building Society, pays 1.40%. Halifax, on the other hand, offers just 0.80% – a significant 0.60% less.
|Main Banks||Building Societies||Nov-15Difference|
|Average Easy Access Rate||0.50%||0.63%||0.13%|
|Average One-Year Fixed Rate Bond||0.93%||1.39%||0.46%|
|Average Two-Year Fixed Rate Bond||1.12%||1.70%||0.58%|
|Average Cash ISA||1.16%||1.36%||0.20%|
Charlotte Nelson, finance expert at the group said: “It’s shocking that some of the UK’s most well-known and trusted brands are paying savers dismal rates of interest.
“However, building societies are stepping up to the challenge; for example, the average two-year fixed rate bond from the main banks pays 1.12%, a massive 0.58% less than what building societies are offering.”
Moneyfacts found that not only do mutuals come out on top when it comes to rates, but the gap between their deals and those from banks is getting wider, giving savers a clear indication that they may need to look away from traditional banks to get the best deal.
“There is a reluctance to save with unknown challenger brands and a lack trust to save with the big banks, so buildings societies with local stance and principles should appeal to those who are uncomfortable with investing elsewhere,” added Nelson.
“However, building societies have not been immune to rate falls, with the whole savings market being impacted by the decimating effects of the Funding for Lending Scheme. When looking for a savings account, perhaps savers should look closer to home to see if they can get a better deal than from their bank.”