Passbook savings accounts paying less

Customers who insist on a passbook with their savings account are suffering the most, according to analysis by MoneyExpert.com.

The accounts – which are traditionally favoured by pensioners – are paying average interest rates of 0.99 per cent - which is 0.24 per cent lower than the average paid on all instant access accounts.

And the number of accounts offering passbooks has dropped in the past year from 646 to 628 – a decrease of 3 per cent. Over the past two years the number of accounts offering passbooks has dropped by more than a fifth (22.5 per cent).

The number of passbook accounts paying less than one per cent has rocketed with 55 per cent now offering less than one per cent.

Last year 290 passbook accounts paid rates of less than one per cent – now it is 344 out of a total of 628 accounts on the market.

The cuts in rates and the drop in the number of accounts is further evidence of a drive to reduce costs and cut customer choice, MoneyExpert.com believes.

Pierre Williams, Head of Research at MoneyExpert.com, said: “Many older savers like and value the security and certainty offered by a passbook with their savings account.

“For banks and building societies there is a cost in providing passbooks and they prefer to deal over the internet or phone. Unfortunately it is savers who are paying the price which at a time when interest rates are being slashed is not a price worth paying.

“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.”