Wednesday, 31 July 2013

"Well, transparency is one thing" says B of E spokesperson "but we didn't want to upset hard working, hard pressed families

who have one of these heavily advertised and strongly promoted 'bank with us and we'll reward you for depositing £1000 every month, aren't we just marvellous' type accounts ..."

Banks and building societies have since January knocked nearly £850m off the annual interest paid to savers, the Telegraph can disclose. The cuts coincide with banks making billions of pounds in profit in the first half of this year.

The clawback, buried in the details of a report published on Monday by the Bank of England, affects existing customers who hold easy-access savings accounts.

More than 750 cuts have been made to these accounts in just six months, despite the Bank of England Base Rate remaining unmoved at 0.5pc.

However, deeper analysis of the report exposes banks for hacking back the rates paid to loyal savers as well. These movements are made behind closed doors, never publicised and therefore rarely scrutinised.

The average rate on all easy access accounts is now just 0.97pc, down from 1.14pc in January, the figures show.

This is equal to a miserable £485 a year on each £50,000 of savings, compared with £570 in January - a reduction of around a sixth.

By shaving 0.17 percentage points off the return they pay loyal savers banks have been able to swell their coffers, as the lower outgoings free up cash to use in more profitable parts of the business. This is typically lending arms, where banks are taking advantage of renewed enthusiasm in the property market.

Based on the total amount of money in easy access accounts - £496bn according to the latest Bank of England report - this amounts to £843m in lost annual interest.