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Around half of savers hold their cash with the same bank as their current account and miss out on rates that are nearly 100 times better.
High-street banks have been slashing interest rates since the Bank of England cuts its base rate from 0.75pc to 0.1pc. However, lesser known banks have actually started paying out more to savers.
But there has been no mass exodus away from the major lenders. Some 45pc of people still hold their Isa cash with the same bank as their current account, research from stockbroker Hargreaves Lansdown showed. Yet this loyalty does not pay off.
NatWest’s easy-access account, for example, pays just 0.01pc. However, the best instant-access deal is from Coventry Building Society and pays 0.96pc. This means a saver with £20,000 would earn just £2 from NatWest but Coventry would return £192.
Barclays also pays just 0.01pc, although this is rising to 0.02pc in November. TSB’s easy-access option pays just 0.02pc as well, meaning that a saver with £20,000 would earn just £4 interest over a year.
Taking out an Isa with your high-street bank could cost you
Santander, Lloyds and Halifax all pay up to 0.05pc and would provider savers with £10 over 12 months, but they would still miss out on the extra £182 they would have had if they had gone for the best deal.
Hargreaves Lansdown’s Sarah Coles said: “At the moment, even the most competitive easy-access cash Isa from the high-street giants offers a tenth of the best on the market and the least competitive is nearly one hundredth of the rate.”
The firm’s research found that around half of savers had not moved their cash Isa to a different provider for at least five years – and a third had never switched. A report by the Financial Conduct Authority, the City watchdog, found that cash Isa providers tended to cut the rates the longer customers held the Isa for.
Rachel Springall of Moneyfacts, a data provider, said: “Savings rates fell to record lows in August. The market is starting to move in the right direction, but it is the challenger banks and smaller building societies who are offering the top rates.”
However she added that top deals were not always available for long, as has been the case recently. Savers wanting to get a better return on their money could consider locking it away on a one-year fix or longer.
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