The savings promise is a nice idea but let's not get blindsided – we can do better!
Savers at Leeds Building Society will earn at least 0.5% on all their savings accounts from the end of this month after the UK’s fifth largest building society announced it was introducing a minimum interest rate.
From 24 October customers with taxable accounts and cash ISAs will earn at least 0.5% interest. Those with an online account will get a minimum rate of 0.6% and notice accounts will pay a minimum 0.75%.
The move will see many long-term customers see an increase in the amount of interest they earn, but anyone with a newer account that pays more than the minimum will not see any uplift in their returns.
Step in the right direction
A minimum rate of 0.5% may not seem impressive, but it is a step in the right direction.
Millions of savings accounts pay next to nothing after introductory rates and bonuses run out.
HSBC and NatWest both pay just 0.01% on their standard easy-access savings accounts. That amounts to an annual return of a measly 10p on a £1,000 balance.
Meanwhile, Barclays, Halifax and Lloyds pay 0.05% – a 50p return on £1,000.
We can do better
Really, we should all shop around for the best rates regularly and not leave our money in accounts that pay pitiful savings rates, but at least Leeds Building Society is taking steps not to punish loyalty or laziness.
You can compare savings rates using the loveMONEY comparison centre or take a look at our regularly updated best buy roundup: where to earn most interest on your cash.
The move comes as building societies face pressure to stick to their business aims in a low interest rate environment.
Rather than being run to line the pockets of shareholders building societies are meant to put their customers' interest front and centre as they are its members.
Low interest rates benefit borrowers but leave savers to suffer. As Leeds Building Society has far more people deposit money than borrowing it – 554,000 savings members compared to 152,000 mortgage borrowers – it needed to do something to show it was putting its members’ interests first.
But, a minimum savings rate that is less than a fifth of the current inflation rate is far from dazzling. Take this opportunity to look at your savings accounts see what interest rate you are getting and see if you can do better elsewhere.
Compare savings rates with loveMONEY
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