Four banks continue to pay savings rates at record lows despite a succession of rate hikes by the Bank of England over the past five months.
Barclays, government-backed National Savings & Investments, Allied Irish Bank and Citibank UK are still offering just 0.01pc interest on certain easy access accounts, according to analyst Moneyfacts.
This is despite the Bank of England raising base interest rates to their highest level since 2009. The Bank Rate is now 1.25% after rising 0.25 percentage points.
Banks left savers exposed to runaway inflation by failing to pass on rising interest rates. The Bank of England expects inflation to climb to 11% this year, the highest rate in nearly four decades.
This means that a saver with £10,000 in an easy access account paying 0.01pc would only earn £1 in interest over the course of a year. But the true value after 11% inflation eroded the pot would be £9,010 – a loss of £991, according to analyst Savings Champion.
The company’s Anna Bowes said: “After less than seven years, your money will be halved. It would be worth £4,820 after seven years, a loss of £5,187. It’s really scary.
No account comes close to the current inflation rate of 9%.
Sarah Coles, of stockbroker Hargreaves Lansdown, said: ‘The biggest problem is that the banks have so much cash right now after so many people have deposited savings during the lockdowns, and as long as it stays that way , they have no incentive to raise rates.
“So savers really can’t be lulled into a false sense of hope, they really need to move for a better rate.”
None of the major banks passed on the four bank rate increases to customers.
A Barclays spokesperson said the bank was currently reviewing its savings rates in light of yesterday’s Bank of England decision, while a spokesperson for NS&I said it was reviewing regularly its rates and recommended changes to HM Treasury “as it considered appropriate”. Allied Irish and Citibank UK did not respond to requests for comment.