Eight leading UK high street banks, including Lloyds, NatWest, Halifax and Barclays, are offering the lowest interest rates on their instant access savings accounts. As of September 24, these banks were paying at or below 1% interest, while the Bank of England base rate remained at 3.75%.
This means customers' money is effectively devaluing over time as it falls behind inflation and the base rate.
Which banks are paying the lowest rates?
TSB, NatWest, Royal Bank of Scotland and Barclays Bank were offering an instant access account at 1%. The Bank of Scotland, Halifax and Lloyds Bank — all under the Lloyds group — were offering a rate of 0.75%. Metro completed the list at 0.9%.
Financial commentator Paul Lewis exposed the banks, writing on X: "While they earn 3.75% on their reserves account at the Bank of England, they pay some customers 1% or less on their money."
Why instant access rates are lower
Instant access accounts are the simplest way to save because you can deposit and withdraw cash as you please, but the benefit of easy access is often weighed against lower interest rates.
Money saving expert Martin Lewis' website points out, "the rate can change, so ditch and switch if it falls behind the top payers. Put all cash you don't immediately need into one of these".
More restrictive accounts, such as fixed-term ISAs, often offer higher rates because you have to make a deal with the bank to lock your money away for a set length of time at an agreed rate.
Better rates available elsewhere
At present, the most lucrative instant-access accounts offer up to 5% interest, higher than the Bank of England base rate, according to Moneyfactscompare.co.uk.
LemFi is offering an Instant Access Savings Account at 5.00%. For the larger high-street names, Post Office Money has a 4.4% interest rate on its Online Saver Issue 90.
The eight lowest interest rates are: Halifax 0.75%, Lloyds Bank 0.75%, Bank of Scotland 0.75%, Metro 0.9%, NatWest 1%, Barclays Bank 1%, Royal Bank of Scotland 1%, and TSB 1%.
