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Depositors have been robbed of thousands of pounds in interest, according to a Mail on Sunday analysis. The reason, it turns out, is that banks and building societies refuse to offer the highest interest rates to customers who prefer to manage their accounts at branches.
Some banks and building societies offer the best online savings accounts 10x more interest than comparable face-to-face accounts.
In some cases, customers who do not use online banking will not be able to access the highest fixed-rate savings transactions at all.
Among the worst culprits are high street heavyweights such as Santander, the Nationwide Building Society and the Post Office.
Experts argue that providers who offer cheap rates to loyal customers within their branches do so to maximize their own profits. Others justify further closures suggesting that it looks like another ironic ploy to keep people away from the branch because of it.
Andrew Hagger, personal finance expert at Moneycomms.co.uk said: But it is not correct.
He adds: Many providers are telling their online customers about rising interest rates, but not to those who prefer offline banking.
Derek French, founder of the Campaign for Community Banking Services, believes the discrepancies between online and offline savings rates are all part of the bank’s strategy to justify branch closures.
“Banks say they are closing branches because customers want to go digital. It is unacceptable for people who prefer to deposit directly to the bank to be put at such a disadvantage.
Anna Bowes, co-founder of Savings Champion, which specializes in rate review, worries that poor treatment of customers in branches has never come at a worse time.
“Most people are feeling the pinch as the cost of living rises,” she said. You are more likely to be the vulnerable customer that makes the difference.
The Worst Perpetrators of Branch Discrimination
One of the worst offenders is Santander, who pays £27.50 interest on £1,000 on an online-only instant access account, but only £2 on a comparable branch-managed account.
Last week, Santander launched the highest instant access discount rate of 2.75%. The eSaver Limited Edition will be available until early next month, but may be withdrawn early if demand is overwhelming.
However, the account must be managed either online or through mobile banking, so it is only available to those who can bank via computer or smartphone.
Everyday Saver accounts are offered to Santander customers who prefer to bank at a branch or over the phone. This pays only 0.2% interest. That’s 1 in 13.
The situation is equally poor with the easily accessible Isa account. The Santander eIsa pays 2% for 12 months on balances from £500, but must be managed through online and mobile banking.
In contrast, those who prefer to bank offline receive just 0.2% interest from Easy Isa – with balances starting at £1.
A Santander spokesperson said: Some of the most competitive earnings among both high-street and digital-only providers.
Mutuals don’t want to hug as much as they look
The Nationwide Building Society prides itself on its in-branch service. Unlike other providers who are closing chapter after chapter, they have promised that there will be no chapters left in towns and cities currently served by the association until at least 2024 (although some branch is closed). But the savings rate is a different story.
Nationwide’s 1-year fixed rate online bond pays 4% interest, while non-online customers pay 3.25% interest. Similarly, that her two-year correction is online he is 4.5% and not online he is 3.5%. A 3-year fixed rate online bond pays 4.75%, but there is no comparable bond for customers who prefer offline banking.
Hagger said: But not really if you don’t store it online. There are two levels of service. If you go online, it will love you and give you the best deals.
A Nationwide spokesperson said: In order to be able to do so, we may offer online investment accounts, such as fixed rate online bonds.
Branch staff add that they support members who are not digitally active by opening online bonds through online banking or mobile banking apps.
…and the post office is not that good
The Post Office offers two tiered savings rates. One for people who go online and one for people who don’t.
A saver of £1,000 on the Post Office’s online Isa will receive £10 in interest after a year, while a saver who does not prefer online banking will receive only £6 on a similar account.
On the other hand, if you win £1,000 in a year’s online bond, you’ll earn £23 after a year, but only £17 in a comparable offline account.
Rates offered at branches will be raised to be the same as rates offered online on Thursday, the Post Office said. This is three weeks after it launched online. They said it would take time to change the branch rates because the new information would have to be printed and distributed.
Virgin Money Completely Ignores “Offline”
Virgin Money offers some of the most competitive fixed rate savings bonds in the country. That his 1 year bond he pays 4% and ISA pays 3.7%.
The interest rate for the 2-year bonds is 4.27% and for Isa is 3.75%.
However, there is not a single fixed-rate savings account available to offline customers. Virgin Money said:
National Savings & Investments is trusted by millions of savers to protect their nest eggs. Customers managing their accounts online or by phone can access her 1.2% rate on balances from £1.
But for those who want it mailed, NS&I offers rates over 100x. Its investment account pays only 0.01%.
An NS&I spokesperson said:
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