Millions of savers in the UK are being short-changed because banks are failing to pass on the rising interest rates. The Bank of England base rate has increased by 0.75% over the past year, however many savers have seen only a 0.25% or less rise in their interest rates on their savings.

To name just two:
ING Direct savers have had just 0.25% passed onto them, with the bank ignoring both the November and January rates rise.
Alliance & Leicester Phone-Saver account holders have only seen a 0.15% raise in the past 12 months.

The Banking Code states that banks and building societies should notify if they account has been downgraded by 0.5% or more before tax relative to the base rate in a rolling 12 month period, therefore any bank or building society that has only passed on a maximum of 0.25% rates rise onto their savings rates should have sent letters to all their customers explaining this.

Now is a great time to get away from the accounts that haven’t had the rates passed on. Landsbanki’s Icesave, a new account from the Icelandic bank, is one of the better accounts around. The pledge to pay at least 0.25% above the base rate until 1 October 2009 and at least the base rate until 1 October 2011. Their rates are currently amongst the best accounts at the moment, and with the promise that their rates will stay high for the near future, they are one of the better accounts for people who do not want to continutally switch accounts.

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