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New research reveals widening gap in retail savings rates in the last 12 months as branch-based customers miss out on best deals

New analysis of the market for one-year fixed rate savings bonds and easy access savings accounts, commissioned by Investec, shows how interest rates in the top quartile of accounts have surged in the past year in comparison with those languishing in the bottom quartile.

The average rate for the top 10 easy access savings accounts (as at 21st February 2022) is 0.67% and for the top 10 one-year fixed rate bonds it is 1.42%.

For fixed rate bonds, the average interest rate across all one-year products has doubled to 0.88% – but there is a huge gap in the rates from the top quartile of accounts which are 0.74% higher in the past year while rates for the bottom quartile have barely moved – up just 0.04%.

 

Average Interest Rates

One Year Fixed Rate Bonds

February 2021 February 2022 Increase
Whole Market 0.44% 0.88% 0.44%
1st Quartile 0.62% 1.36% 0.74%
2nd Quartile 0.52% 1.14% 0.62%
3rd Quartile 0.40% 0.78% 0.38%
4th Quartile 0.25% 0.29% 0.04%

 

For easy access savings accounts as a whole, average rates have barely moved in the past year – they are up by just 0.07% – but there is a big difference between the top and bottom quartiles. The average for the top quartile is 0.16% higher while the bottom quartile is just 0.01% better.

 

Average Interest Rates

Easy Access Savings

February 2021 February 2022 Increase
Whole Market 0.16% 0.23% 0.07%
1st Quartile 0.37% 0.53% 0.16%
2nd Quartile 0.18% 0.26% 0.08%
3rd Quartile 0.07% 0.11% 0.04%
4th Quartile 0.01% 0.02% 0.01%

 

Branch-based customers missing out on best deals

The analysis highlights how branch-based accounts are very much in the minority among the top quartile.

In the easy access savings space, only 35% (15/43) of top quartile accounts can be opened in branch while 46% (19/41) of accounts in the bottom quartile are offered by the big high street players.

The situation is worse when you look at one-year fixed rate bonds with only 14% (3/21) of the top quartile available to open in branch while well over a quarter of products (6/21- 29%) in the bottom quartile are offered by high street banks.

Samantha Booysen, Head of Digital Savings at Investec, said: “Although many savers have seen an upturn in rates over the last 12 months, some will unfortunately find they are still receiving a below average return. It’s worth checking your current rate with your savings provider to ensure you’re not missing out. A quick check of the best buy tables will help point you in the right direction.”

Andrew Hagger, Founder and Director, MoneyComms, who conducted the research for Investec, said: “The difference in rates between the top and bottom quartiles of savings accounts is getting wider and many customers are getting an increasingly poor deal.

“Competition in the market has seen best buy rates improving in the last 12 months but the best rates are available from the newer providers rather than branch-based banks on the high street.

“The new breed of savings providers, many of which offer online or app only products, are leaner and have fewer overheads, a factor which enables them to offer more competitive savings rates to customers while still offering the same Financial Services Compensation Scheme (FSCS) protection as the big established high street names.”

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