Savers get a better deal when they deposit their cash with a building society rather than a bank, new research reveals.
Savings comparison website Savings Champion found that on 31 December 2017, cash saved with building societies earned an average of 0.95% compared to 0.69% in banks.
This gap was even wider when considering accounts that were still open to new customers. With these accounts, the average return from building societies was 1.04% versus 0.7% at banks.
Savers with banks are also more likely to earn below the base rate than those using mutual organisations. Data shows just 47% of bank savings accounts pay more than the 0.5% Bank of England base rate compared to 71% of products at building societies.
Tom Adams, head of research at Savings Champion, says: “It is clear when you look at these figures that, on the whole, building societies are showing greater support for savers than banks. Building societies overall pay higher interest rates and demonstrate a greater commitment than banks to treating savers fairly.
“Of course, these are overall figures and there are some exceptions within each group, with the challenger banks in particular continuing to drive competition in the savings market and dominating the best buy tables.
“While challenger banks are pushing the group averages up, the big high street names are doing the opposite and they continue to pay some shockingly low interest rates. With a significant portion of savers' funds still languishing in uncompetitive accounts with high street names, now is the time to vote with your feet and look for an alternative.”
However, savers should still research and choose an account on a case-by-case basis given the best products of the day.
For instance, today the Moneywise Best Buy easy access Cash Isa is the OakNorth Bank Personal Easy Access Cash Isa, paying 1.25% to savers. By comparison, the top mutual account, the Leeds Building Society Limited Issue Online Access Isa (Issue 4), offers a lower 1.16% rate of interest.
Yet in the Junior Isa market the top paying product is the Coventry Building Society Junior Cash Isa at 3.5%. This is higher than the best bank product, the Tesco Bank Junior Cash Isa, paying a lower 3.15%.