Sainsbury’s warns of disparity across savings interest rates

Sainsbury’s Bank urges savers to continue to shop around for competitive rates of interest from their savings accounts. New research from the bank reveals that there is huge disparity across the board with 16% of banks and building societies still offering savers derisory rates of less than 2% Gross AER.

Sainsbury’s Bank’s analysis of 457 bank and building society savings accounts indicates that even though the savings market remains highly competitive there are still many accounts paying poor rates. Over a third of savings accounts are offering derisory interest rates, with 14% sitting in the 1% and 2% interest rate band and 21% paying slightly more with rates lying between 2% and 3%. In all, nearly 40% of accounts are paying less than 3%.

Despite the recent rises in the Bank of England base rate to 5.25%, only one in five (21%) accounts is offering rates of 5% or more. This group includes Sainsbury’s Bank’s own Internet Saver account, which pays 5.5% Gross AER and beats the market average interest rate (3.5%) by 2 percentage points.

Sainsbury’s Bank offers a choice of three savings accounts, all of which offer rates that are amongst the most consistently attractive available. Indeed the lowest rate paid by the bank is a competitive 3.9% Gross AER on balances of £1 on its IASA (Instant Access Saver - branch based equivalent account).

Peter Wood, Head of Savings, Sainsbury’s Bank said: “It really is quite staggering that there are so many accounts paying 2% or less. Savers simply must ensure that they shop around to get the most competitive rates. While the Bank of England base rate is an indicator, and has prompted some accounts into putting up their interest rates, savers need to look for accounts that have played fair, like our Internet saver which offer consistently competitive rates.

“Our research also indicates that over a third of accounts are paying less than 3% interest. These rates are far from competitive and we would urge savers to keep a close eye on their savings interest rates and be prepared to switch from accounts that are not paying consistently attractive returns.”