Awful. That was the reaction from a leading savings expert after Barclays Bank broke ranks last week and finally pushed up some – not all – of its savings rates in response to last month’s hike in Bank base rate to 0.25 per cent.
The ‘awful’ came from the mouth of Anna Bowes who, for her sins, spends her working life poring over savings rates as co-founder of rate scrutineer Savings Champion.
As Anna readily admits, it’s not a particularly enlightening occupation at the moment given the reluctance of most banks and building societies to pay savers anything other than a pittance. Anna says ‘awful’ a lot these days – and understandably so.
Cash strapped: Savers are receiving poor returns from the hard-earned cash they have in savings accounts
The word wasn’t muttered because Barclays had broken ranks – that was commendable – but for the parsimony of its belated reaction to the 0.15 percentage point rise in base rate that was announced a month ago on December 16.
The bank, which made profits of £2billion in the third quarter of last year (up from £1.1billion over the same period in 2020), said it had increased the rate on its Instant Cash Isa from between 0.02 per cent and 0.05 per cent to between 0.05 and 0.1 per cent.
For savers with less than £30,000 in the account, it will mean a paltry 0.03 percentage point increase in the tax-free interest they receive. An extra £3 in annual interest for every £10,000 of savings, a fiver instead of two pound coins. For those with £30,000 of savings, they will now receive annual interest of £30 compared to £15 previously.
If Barclays had passed on the full 0.15 percentage point increase in base rate – as we have been demanding as part of our Give Savers A Rate Rise campaign – the equivalent interest payments would be £17 and £60. Hardly income sums to rejoice about but not as awful as what has prevailed.
Barclays told me last week that it remained committed to providing customers with ‘a range of options to help them save for their goals,’ singling out in particular its children’s savings account (paying 1.5 per cent) and its Help to Buy Isa (1.25 per cent). What it omitted to say is that 1.5 per cent is only paid on balances up to £10,000. Above that ceiling, additional balances attract 0.01 per cent.
What it also failed to mention is that its instant access account Everyday Saver continues to pay 0.01 per cent interest on balances up to £10million.
In other words, £1,000 of annual interest on £10million of savings. We wait to see what it will do for these savers in the coming days. But one thing’s for sure. It won’t be much.
Towns and villages need essential community services
Community lies at the heart of a lot of the issues we cover in The Mail on Sunday’s personal finance pages. Although acknowledging the digital world we live in, we believe that our towns and villages should be vibrant places where essential community services – for example, a bank, post office, library and pub – are available.
For example, it’s why we have long been flag wavers for community-style banks – bank branches run by a third party, typically the Post Office, which all customers of the major high street banks can use.
Community is also an ethos embodied in everything that the 1,700 Rotary clubs in Great Britain and Ireland do. Comprising some 40,000 members, drawn from all walks of life, these clubs strive to improve their local communities. They do it voluntarily and regularly raise bucket-loads of money for local charities.
Last Thursday night, I had the privilege to speak at a dinner organised by Reading Abbey Rotary, a club comprising some 40 spirited individuals.
And it was indeed a privilege as I told them about our editorial focus on community while learning about the good work they do in Reading and its local environs. They support food banks and raise funds through the organisation of events such as 10-kilometre runs around local estates (it’s how I first got to know of the club’s existence).
Rotarians are a force for local good. If you fancy becoming one, visit rotarygbi.org.