Web of intrigue as internet savers lose millions

The Big 5 High Street banks are offering "dial-up" internet savings rates in a "broadband" market, according to research from Skipton Building Society.

In the past year, the Big 5 have cut rates on internet savings accounts by up to 45bps more than Bank of England Base Rate has fallen, costing customers millions of pounds.

The research from Skipton, which launched its Online Access Account in October last year, shows that the Big 5 High Street Banks - Halifax, Barclays, LloydsTSB, HSBC and NatWest, have squeezed the rates paid to existing internet savers, cutting them by more than the fall in base rate. Since its launch, Skipton's Online Access Account has followed base rate and now pays 5.35% gross (inc. bonus).

With combined deposits in excess of £400bn, Skipton estimates that even if just £10bn (2.5%) is held in these internet accounts, savers with the Big 5 have lost around £29 million over the past year.

Some of the Big 5, e.g. Halifax, LloydsTSB and HSBC, have tried to cover their actions by launching new variants of their accounts with better rates to attract new business, while squeezing their existing customers' rate to generate greater profits.

Steve Aldous, general manager, sales and marketing, said: "The Big 5 banks relying on customer inertia to swell their coffers. They are covering up rate cuts by hiding these accounts in the background with new offers, leaving existing customers in the dark.

"These old accounts and closed issues are a soft target for the banks as they look to increase their profits. If you still have one of these accounts, it's time you switched to a better rate."