Savers left disappointed as Barclays, NatWest, and Lloyds withheld interest rate increases.

Barclays, NatWest, and Lloyds – the UK’s largest banks – have refused to commit to passing on the recent interest rate increases to savers despite making mammoth profits. So while the base rate has soared from 0.1% to 4.25% since December 2021, the average easy-access savings account has moved from a paltry 0.2% to only 1.85%.

Unfortunately, it is no longer standard practice for banks to follow the base rate and pass the benefits to savers. In recent years, banks have ignored interest rate increases entirely or raised their rates by only 0.1% – the bare minimum required. However, in the case of standard variable rate mortgage customers, banks are quick to charge more – often by the total amount.

Bankers make money by lending the savers’ money to borrowers more than they pay the savers in interest rates. As a result, the difference in these two rates (known as the “net interest margin”) is where banks make their profits.

Lloyds Banking Group and HSBC’s profits have almost doubled in the last three months of 2022, boosted by interest rates worldwide. NatWest, for its part, revealed last week that it made 14 times more from savers in 2021 than in 2020 – a net income of more than £1bn.

Despite these soaring profits, the banks refuse to pass the benefits of the increased base rate to their loyal customers. The situation continues favoring banks over savers, and they do not treat their customers fairly.

Anna Bowes of Savings Champion states, “Banks are taking advantage of the situation as they can raise rates very slowly and are raising it by the minimum they can get away with. However, the fact is they’re not treating customers fairly.” James Blower of Savings Guru offers a simple example: “A bank pays a saver 2%, charges a borrower 4% on their mortgage, and has a net interest margin of 2%. This, less their costs, is where they make their money.”

While some banks have more money deposited from savers than they lend out to borrowers and put their excess with other banks – including the Bank of England – many opt to keep their profits by charging their loyal customers more.

Savers’ money is losing its value in real terms to high inflation rates. For example, £10 deposited into the top-earning easy-access account with Chip at 3.4% would only be worth £10.34 in a year, but with inflation at 10.4%, the spending power would be in real terms only be £9.37. In Virgin’s Everyday Saver account, paying 0.25%, your £10 would grow to £10.03, but its real value would have fallen to £9.08.

In conclusion, for bankers, profits outweigh ethics, common sense, and gratitude toward their dedicated customers. So, if you’re a saver, consider moving your funds from these banks, and encourage them to treat their customers fairly by doing so.

Related Facts:

– Since December 2021, the Bank of England’s base rate has increased from 0.1% to 4.25%.
– Despite this, banks in the UK are unwilling to pass on interest rate increases to their savers.
– Banks make money by lending savers’ money to borrowers at higher interest rates than they pay to the savers.
– NatWest revealed that it made over £1bn from savers in 2021.
– Savers are losing money in real terms to high inflation rates.

Key Takeaway:

Banks in the UK are making bumper profits at the expense of their loyal savers, as they refuse to pass on the benefits of the increased base rate. As a result, savers’ funds are losing value in real terms to high inflation rates while banks continue to profit.

The best action is to move funds from these banks and encourage them to treat their savers fairly. Banks must prioritize ethics and gratitude towards their customers over profits.

Banks in the UK are losing their moral compass as they put their profits above treating their customers fairly. As a result, savers who have stuck with these banks are losing out on potential benefits. It’s time to consider moving your funds to banks that prioritize their customers over profits.