By Sylvia Morris
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Savers are missing out on hundreds of pounds of interest by leaving their cash with Britain’s biggest banks and building societies, new research reveals.
The top High Street names have cut interest rates at a time when savers are leaving more money with big brands because they deem them less at risk to the eurozone crisis.
Research by website Governor Money shows the gap between rates paid by large and small providers is widening. Savers can miss out on an average 0.29  per cent by sticking to big banks and building societies.
Poor rates: Savers are missing out on hundreds of pounds of interest
However, much larger gaps exist. Principality BS pays 2.28  per cent (2.85  per cent) on its internet account and Derbyshire BS 2.44  per cent (3.05  per cent).
These rates are far better than that paid by Lloyds TSB which is 1.28  per cent (1.6  per cent) on balances up to £10,000.On fixed-rate deals Allied Irish Bank (GB) Savings Direct pays 2.72  per cent (3.4  per cent) for one year, while at Halifax the rate is just 1.8  per cent (2.25  per cent) and Barclays 1.6  per cent (2  per cent). The difference means losing out on as much as £140 interest before tax on each £10,000.
Savers who avoid EU banks such as the Spanish-owned Santander, or Post Office and Allied Irish Bank (GB) Savings Direct â€" both owned by Irish banks â€" will also miss out on top rates. These include easy-access accounts paying 2.4  per cent (3  per cent) or more.
These EU banks have exactly the same financial guarantees for savers as all UK banks and building societies. They are part of the UK Financial Services Compensation Scheme (FSCS), under which the first £85,000 of your money with each bank registered with the Financial Services Authority (FSA) is covered. The figure is £170,000 for joint accounts. The scheme aims to pay out within seven days if a bank goes bust or within 20 working days in more complicated cases.
One notable exception is ING Direct, owned by a Dutch Bank. Here your money is covered by the Dutch Central Bank’s Deposit Guarantee Scheme through which you can claim up to €100,000 (around £80,600).
Anoth er exception is National Savings and Investments where your money is 100  per cent covered by the UK government.
The current system is confusing for savers even among UK banks and building societies as some share a FSA banking licence.
For example, savers with deposits in Halifax, Bank of Scotland, Intelligent Finance, BM Savings, AA Savings or Saga would get only one set of compensation cover.
It means you have to add together all your savings â€" including your current account and cash Isas â€" with these offshoots to make sure you don’t breach the £85,000 limit.
sy.morris@dailymail.co.uk
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