Proactive Investors - High street banks like Lloyds Banking Group PLC (LON:LLOY) and Barclays PLC (LON:BARC) offer some of the poorest saving rates out of all UK lenders, research from Which? found.
Between January 2020 and March 2023, Barclays and Lloyds only paid 0.1% interest to users of their instant access accounts.
Lloyds also only offered 0.13% for its instant access Isa during the same period, better than only Nationwide Building Society (LON:NBS) and Danske which both provided a 0.08% interest rate.
Challenger banks and building societies allowed for more competitive saving rates on average, at 0.57% and 0.42% respectively, the Which? research revealed.
The saving rates of these alternative banks appeared huge in comparison to the high street lender's average interest rate of 0.16%.
“Our research shows that established high street banks are short-changing customers by potentially hundreds of pounds a year,” said Jenny Ross, editor of Which? Money.
She advised that if consumers aren’t happy with their saving rates now was the perfect time to switch.
Interest rates offered by all the banks have risen recently as the Bank of England has upped base rates but some of the highest interest rates being offered were by smaller, relatively unheard-of, banks such as private lender, Brown Shipley.
The bank averaged a 2.71% rate on one-year fixed saving accounts and a 1.32% return on instant access savings.
For instant access Isas, Saga and Gatehouse Bank topped the list offering rates of 1.49% and 1.25% respectively.
The financial conduct authority has written to some of the high street banks, demanding them to justify why such meagre returns are in place despite interest rates that consumers pay soaring.
The regulator said it would take “onerous interventions” should the major banks be unable to excuse the low saving rates.