Newspaper article The Evening Standard (London, England)

Wave Goodbye to Low Rates by Joining Challenger Banks; the New Boys Are Keener to Pay out on Savings So Don't Stick with the Big Five

Newspaper article The Evening Standard (London, England)

Wave Goodbye to Low Rates by Joining Challenger Banks; the New Boys Are Keener to Pay out on Savings So Don't Stick with the Big Five

Article excerpt

Byline: Simon Read

DO YOU still have a savings account with one of the traditional banks or building societies? You could be missing a trick, say savings experts, who warn that remaining loyal to a bank or building society could be costing you a pretty penny.

With the latest inflation figure revealed last week to be 0.1%, you don't need to get huge interest on your nest egg to be sure you're getting a real return. But if you've left your money languishing in an account at one of the big banks, you're likely to find that whatever great rate you first signed up to has long since disappeared. Frankly, if you haven't switched accounts recently, you may even discover that your account is actually paying less than inflation, with the worst providing a pathetic 0.05% return.

A report from bean-counters at KPMG last month revealed that the UK challenger-banking sector is outperforming the Big Five UK High Street banks Barclays, HSBC, Lloyds, RBS and Santander. "For all challenger banks, the main point of difference is their culture," says Warren Mead at KPMG. "Being largely free of the legacy problems of the past contributes to a sense of social purpose that puts fire in the bellies of their executives and front-line staff alike." That fire translates into them being fiercely competitive and keen to attract new customers. And that means savers can win with much better interest rates.

Simon Healy of Aldermore bank says: "If savers want to get the best rate, then they need to shop around. Staying loyal to some of the High Street banks could unfortunately prove costly in the long run."

Anna Bowes of SavingsChampion certainly thinks you could be better off by moving your nest egg to one of the newer banks. "Challenger banks have dominated the best-buy tables and changed the savings landscape in recent years and that trend looks set to continue," she says. …

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