Savers lose £12bn a year after banks slash rates

British savers are losing out on a possible £12 billion in interest payments by staying with low-rate accounts, according to the survey which found that nearly half of 1,200 savings accounts in the UK are paying interest of 0.5 per cent or less.

The survey even found two accounts - one operated by the Ulster Bank, a subsidiary of the Royal Bank of Scotland, and another by the Newcastle Building Society - that pay a paltry 0.01 per cent rate, an annual return of 10 pence for every 1,000 saved.

The consumer champion also claims that banks are not being upfront about the poor returns they offer, with few showing interest rates anywhere on regular statements or telling customers about better accounts.

But Which? has secured a commitment from Royal Bank of Scotland, Lloyds Banking Group and Santander to improve the information they provide to their customers.

Peter Vicary-Smith, the Which? chief executive, said: "Banks are depriving British savers of 12 billion a year by keeping us in the dark about the pitiful interest paid on hundreds of savings accounts.

"Whilst we pressure the banks to be more upfront about their rates, people can take action and potentially add hundreds of pounds a year to their savings by moving their money to a better account."

The Which? report says: "A bank that paid its customers no interest on their savings wouldn't last long. Or at least that's what you'd expect.

"Yet in Britain today, one in four savings accounts pays interest of just one tenth of a per cent or less. That's a total payout of 1 a year for every 1,000 saved - before tax."