When it comes to your savings, the old saying “If nothing changes, nothing changes” rings true.
In other words, if you keep doing what you’re doing, you will keep getting what you’re getting!
Last week the UK’s biggest banks were hauled in front of the Financial Conduct Authority to explain why they aren’t passing on rises in interest rates to savers as quickly as they are to borrowers.
The explanation for this is probably the simplest one – because they make a lot more money that way.
The good news is that if you have savings languishing in an account paying less than one per cent in interest, you can – and SHOULD – switch. The big banks rely on you not thinking too much about your savings. But, although they don’t want you to know it, the power really is in your hands.
Here we expose some of the lowest-paying savings accounts out there. Unsurprisingly you’ll see these are also some of the worst offenders for funding climate change. We also highlight the top-paying accounts from providers that treat their customers and the planet fairly.
Lowest-paying savings accounts
Everyday Saver – 0.85 per cent AER/gross/variable
High street giant Santander is currently paying one of the lowest rates on the market with its Everyday Saver at a measly 0.85 per cent.
If you saved £1,000 in this account, over the course of one year you would only make £8.50 in interest – and if you had £10,000 saved in there, you would make just £85.
2. Lloyds Bank
Easy Saver – 0.90 per cent AER/gross/variable
The interest you get with the Lloyds Easy Saver accounts depends on your balance. If you have between £1 and £24,999 in savings then you will only see a rate of 0.9 per cent.
Those with a balance of £25,000 and a whopping £99,999 get a slightly better rate of 1.15 per cent and pots over £100,000 attract the best rate of only 1.5 per cent.
If you have savings of £1,000 over the course of a year you will make £9 in interest, those with £25,000 will make £287.50 in interest and Brits with a savings pot of £100,000 will make £1,500.
Although this may sound like a lot, if you had a bank account with a five per cent interest rate – matching the current base rate – then you could make an extra £5000.
Everyday Saver – 0.95 per cent AER/gross/variable
Another account with an interest rate that varies according to your balance. Halifax pays just 0.95 per cent on balances up to £9,999.
Savings pots between £10,000 and £49,999 get a rate of 1.05 per cent while those over £50,000 can expect 1.3 per cent.
With the minimum amount you need for each tier, the current rate will give you an extra £9.50, £105, and £650 over the course of one year.
Every Day Saver – 1 per cent AER/gross/variable
The Everyday Saver account from Barclays might seem generous compared to Santander at a whole one per cent, but the 0.25 percentage point difference won’t add much to your savings pot.
If you had a pot of £1,000 in there then you would only make around £10 in interest over the course of one year.
Flexible Saver – 1.11 per cent AER/gross/variable
Like Lloyds and Halifax, this account also offers a higher interest rate to the bigger savings pots.
For savings up to £24,999 you can get an interest rate of 1.11 per cent, and up to a massive £99,999 it’s 1.76 per cent. Balances up to £250,000 get 2.32 per cent and over this it’s 2.89 per cent.
Going by the minimum amount you need for each interest rate range, you could earn interest of £11.06, £882.05, £3,486.60, and £8,662.55 respectively over one year.
Top-paying ethical savings accounts
For a fair comparison, these are all easy access accounts.
1. Nationwide Building Society
Start to Save Issue 2 – 5.25 per cent/gross/AER/variable for 24 months rising to 5.50 per cent from July 14.
Nationwide offers an impressive interest rate (above the base rate which is currently five per cent) on this account. Not only that, it incentives you to save by entering you into a £250 prize draw if you put money away regularly.
However, the rules to this are you must increase your balance by at least £25 but by no more than £50 in each of the six months leading up to a prize draw to be in with a chance of winning.
If you had a pot of £1,000 then you would make £52.50 in interest over the course of one year.
2. Leeds Building Society
Limited Issue Online Access Account – 4.20 per cent/gross/AER/variable
Minimum deposit on this account is £1,000. If you kept your pot at £1,000, after a year you would have made £42 in interest.
3. Raisin UK
Castle Community Bank Easy Access – 4.17 per cent/gross/AER/variable
Castle Community Bank offers its Easy Access account through comparison site Raisin with an interest rate of 4.17 per cent. The minimum deposit is £1,000. You can top up your account with the minimum amount of £500 per transaction and the maximum balance you can have is £85,000.
If you kept your pot at £1,000 then you would make £41.70 in interest over the course of one year.
4. Tandem Bank
Easy Access – 4.10 per cent/gross/AER/variable (with ‘top-up rate’ – you need to manually apply this, but it’s the click of a button)
There is no minimum deposit on this account paying 4.10 per cent. After a year of saving £1,000, you will have earned £41.
5. Skipton Building Society
Easy Access Saver – 3.60 per cent/gross/AER/variable
The minimum deposit on this account is just £1 and interest is 3.60 per cent – so on £1,000 over one year you’d make £36 in interest.
So what are you waiting for? Make a good move for yourself and the planet and switch your savings!
Remember if you don’t need your savings for at least five years, you should consider investing as you’re likely to attract higher returns in the long term. Unlike saving, when you invest your capital is at risk.