The vampire savings accounts paying just 0.01% on your cash – and where to stash it instead
SAVERS are being paid pitiful interest rates by Britain’s biggest banks despite rising interest rates.
Savings rates have generally been poor, with top accounts only paying three per cent.
The Bank of England has consecutively raised the base rate ten times since December 2021 and savings rates have been creeping up.
Rising rates mean that savers can better take advantage of a number of different types of accounts – and more specifically notice accounts.
But for these bank accounts rates are still extremely low and The Sun has found over 20 savings accounts paying below 1% interest.
The worst savings accounts right now
The worst offender for the lowest savings rates, according to MoneyFacts.co.uk, is Citibank.
The worst account pays just 0.01 per cent, the Citibank Flexible Saver Issues 1-12.
For a saver with £500 tucked away, a 0.01 per cent account would translate to 5p in interest per year.
If you had £1,000 you’d get 10p and even if you had £10,000 tucked away you’d only earn £1.
By contrast, inflation is currently at 4 per cent, which means that if you’re stuck in a low interest account your savings are actually getting less valuable in real terms.
The last time was in December, when it went up from 3% to 3.5%.
This followed the single biggest hike from 2.25% to 3% in November. The last time it had risen more than this was at the end of 2008.
Inflation is the rate at which the prices for goods and services increase.
This means that everything is expected to get 4% more expensive over the next 12 months.
So if your savings are earning less than the inflation rate, the amount of stuff you can buy with your money goes down over time.
Citibank was actually the second and third lowest paying bank too, with 0.03% for its reward saver issue 10 and 0.05% for its flexible saver.
There is then a slight jump to TSB’s save well limited access saver which offers 0.24%
The Sun has contacted Citibank for a comment.
How can I find the best savings rates?
Myron Jobson, senior personal finance analyst at interactive investor, said that finding the best savings account doesn’t always mean choosing the best rate of interest.
“Fixed rate savings account typically offer the most attractive rates of interest as you won’t be able to withdraw it until the term ends without being penalised.”
“Easy access accounts give you instant access to your cash – the trade-off typically being a less attractive savings rate than savings in a fixed rate.
“When it comes to savings, higher interest rates do not always translate to higher savings rates.
“It could take months for the increase in interest rates to trickle through to savers – if at all.”
Myron added: “The amount you are looking to save could guide your decision.
“An uptick in savings rates could mean the difference between pennies and hundreds of pounds depending on how much you have to save.”
Use comparison tools to compare the best rates
To find the best savings accounts, you can use comparison tools like Comparethemarket and MoneySuperMarket.
These are updated regularly so they’re useful to make sure you’re getting top rates.
For example, Chip currently offers the top rate for easy-access accounts at 3.15%.
If you’re willing to wait a few months before accessing your cash, Investec offers 3.55%.
While Andrew Hagger, personal finance expert from Moneycomms commented: “Try to find a savings account that works for you – don’t just open a savings account at the same provider where you keep your current account, you can probably get a better rate elsewhere.
“Take a quick look on the best buys to see just how much you can earn now – rates are the highest they’ve been for almost a decade.”
Andrew added: “Check the terms and conditions of the account before you sign up – are the number of withdrawals limited or does the rate include a bonus which drops away after 6 or 12 months?”
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk