How we're paying for the banks to have a holiday

Edited by the Insidemoneytalk editorial team May 10, 2007

moneysupermarket,com calls on savings providers to pass on any increases to the base rate with immediate effect

Savers in the United Kingdom look set to miss out on £240 million1 in interest this month.

Research by price comparison site moneysupermarket.com shows delays by bank and building societies in passing on Bank of England interest rate rises in August, November and January have already cost savers a total of £360 million1.

Kevin Mountford, head of savings and current accounts at moneysupermarket.com, said: " It takes providers an average of 20 days to pass on an interest rate rise".

"With providers avoiding paying out £12 million per day in interest3 with each half per cent rise, it's easy to see why they delay".

""A half per cent rise this Thursday would take the providers' windfall to a total of £600 million1 between August 3, 2006, and the end of this month".

""Not only are banks enjoying two holidays this month, but it looks like savers will be paying them to enjoy a five-star break too".

""If the reason for the average 20-day delay is operational then banks and building societies should backdate the rise so that their customers benefit.

While it is unreasonable to expect banks and building societies to do this for the three rate rises since August, moneysupermarket.com calls on them to do so from this Thursday onwards - following the lead of the Bank of Cyprus which has increased rates on the day of the rise on all three occasions so far".

""It is common practice for banks and building societies to credit people's accounts from the date that cheques go in, so this would be very much the same principle.

"With savings conservatively estimated at £885 billion, and expected to reach £1 trillion this year4, this is a huge market and providers should play fair by the UK's 25 million savers".

""A Bank of England decision to increase interest rates on Thursday, by perhaps half a per cent, will be good news for savers but why should banks and building societies benefit for 20 days while consumers wait until Wednesday, May 30 to see anything?".