Savers passing up interest by the book

Customers who insist on a passbook with their saving account are receiving an average of 0.5 per cent less on their cash, according to analysis by MoneyExpert.com.

And going by the book means savers have considerably fewer top-paying accounts to choose from, the independent financial comparison website says.

The average rate on an instant access savings account with a passbook is 3.84 per cent compared with 4.3 per cent paid on balances of £1,000 or more on accounts without passbooks.

Just eight accounts which do offer passbooks pay rates above five per cent, research shows, compared with 18 accounts without passbooks.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “Many savers like and value the security and certainty offered by a passbook with their savings account.

“However there is a cost for banks and building societies in providing passbooks and it is savers who are paying the price. At a time when interest rates are being cut and are likely to be cut further a 0.5 per cent difference is significant.

“Savers who genuinely value having a passbook need to search the market and find the best deals. There are some out there although increasingly it is the case that you earn more without a passbook.”

Currently the highest rate paid on a £1,000 balance without a passbook comes from West Bromwich Building Society – Premier Bonus Tracker 5 with 6.25 per cent. It however is the exception.

Around 83 per cent of accounts offering passbooks pay less than the Bank of England base rate with the lowest at just 0.5 per cent.

For accounts without passbooks the best rate on £1,000 comes from Heritable Bank Easy Access Account (Issue 2) with 6.46 per cent. It only allows transactions by phone or post. There are 18 accounts paying more than five per cent and eight paying more than six per cent.