Mutuals beat high street on fixed-rate returns
Smaller providers usually pay better returns on fixed-rate products than big high street brands, research from online cash savings platform Governor Money has found.
Smaller deposit takers, such as mutuals, pay an average 3.01 per cent AER on fixed-rate accounts, compared to 2.72 per cent from bigger banks and building societies, Governor’s analysis of fixed rates savings across the whole market showed.
This means savers could miss out on 0.29 per cent interest by opting for a bigger, more well-known bank.
The trend is also reflected in best-buy rates. The top 20 rates from smaller providers averaged 4.28 per cent AER compared to 4.01 per cent AER from the bigger deposit takers
Miles Bingham, chief executive of Governor Money, said the eurozone crisis and speculation about the health of UK financial institutions has driven cautious savers to go with bigger providers who they perceive as safer.
He said: “Many savers are increasingly switched on when it comes to finding the best deals, but the nation’s savings industry continues to be dominated by a handful of big names. Savers who overlook smaller providers could be missing a trick.
“While regional building societies and small banks don’t have the branch network to draw in customers, they do
have the products which are more than a match for bigger banks.”
Kevin Morgan, managing director of Hertfordshire-based Consilium Financial Planning, said: “I am a big fan of the smaller mutuals.
“It’s not all about the rate but there is a premium to be paid by going to a smaller society.
“They offer personal service, you can actually walk into a branch and speak to a human being, rather than someone at a call centre through an expensive 0854 number.”