Written by Karen Bryan
While doing my recent research into the highest paying savings accounts, I’ve been wondering why UK building societies (the few that are left) aren’t paying higher rates of interest on their savings accounts than banks.
Surely as a building society is a mutual organisation run for the benefit of its members, whereas a bank is a commercial organisation run for profit to pay dividends to shareholders, a building society should be able to pays its savers a higher rate of interest than a bank?
It would appear not. While there are some decent rates on offer to local residents from some small building societies, the majority of the savings accounts topping the best buy tables are from banks and other profit-making organisations.
The Nationwide is by far the UK largest building society; they’ve taken over the Dunfermline, Cheshire and Derbyshire building societies. The other big players are Yorkshire, Coventry and Skipton.
In my opinion, the Nationwide become less focused on savers in the late 2000s, when the rates of interest paid on their savings accounts started to become less competitive. We’d been building up our Cash ISA pots with the Nationwide for years but transferred then to a higher paying account at the Halifax.
It appears that Nationwide are beginning to offer more competitive rates again. The Nationwide Regular Savings Account is paying 2.5% variable on deposits of £500 – £1,000 a month and the Nationwide Flex Direct Current Account is paying 5% fixed on balances of up to £2,500 for the first twelve months.
But there’s a still a long way to go. For example, the Nationwide e-Savings Instant Access Account is paying a very paltry 0.4% variable, when you can earn 1.0% variable with a Santander eSaver and 1.3% variable with a Halifax Online Saver.
Interest rates correct on 11 August 2013.