Banks and buildings societies have withdrawn almost a quarter of all savings accounts and slashed average interest rates despite being desperate to attract more cash from savers, according to MoneyExpert.com.
The independent price comparison website says that in the past 12 months the number of instant access savings accounts has fallen by 342 from 1,478 accounts in January last year to just 1,136 accounts now – a 23 per cent drop.
Customers aren’t being rewarded for parting with their savings, either. The MoneyExpert.com analysis suggests that in January 2008 the average AER on instant access accounts was 3.76 per cent but that figure has since dropped to just 1.45 per cent.
The number of high-performing accounts has also decreased. Twelve months ago, according to the website, a “staggering” 507 instant access savings accounts paid out 4.5 per cent AER or higher as banks tried to attract new investments. Now just 11 accounts pay out at that rate.
MoneyExpert.com says it believes the falling number of instant access accounts could be due to banks’ focus on long-term savers as they try to improve liquidity.
Many banks and building societies have been promoting bonds and other long term products in order to attract customers to deposit their cash for longer.
Sean Gardner, director of MoneyExpert.com, said: “Banks need a fresh injection of cash but they need the security of long term investments to really improve liquidity.
“So instant access savings accounts aren’t a priority at the moment which explains why a quarter have been withdrawn completely.
“However the base rate has also dropped significantly in the past 12 months so you would expect average interest rates on savings accounts to take a plunge too.
“Nevertheless many banks and building societies aren’t out of the woods yet and you’d think more would be being done to reward customers who put their money into savings accounts.”
The MoneyExpert.com analysis shows there are now 1,136 instant access savings products on the market.
However the financial comparison website is warning consumers with instant access accounts to watch their rates carefully, as they can fluctuate. Some 418 accounts currently pay under one per cent in interest.
The survey underlined Barclays’ chief executive John Varley’s calls for government incentives for savers. In an interview, Mr Varley said the bank welcome moves announced this week to help struggling businesses.
But he warned against losing sight of the needs of savers as interest rates head towards zero.
“To me, the most important issue for lots of our customers is how can we ensure, if we are savers, that we get an appropriate return on that saving,” he said.
“Now that may mean as rates have come down – and they may go lower – that the government needs to create a tax stimulus, a tax incentive for saving, because the ability of banks to create the sort of savings returns that customers had two or three years ago, that ability is quite constrained.”
Mr Varley added: “The biggest issue about zero or close to zero interest rates is the implication for savers and it is important for us to not lose sight of the fact although an awful lot of energy has been directed at looking after those who borrow and those who want to borrow, savers outnumber borrowers in this country by a significant margin.”