Fixed Rate Accounts - Why aren't High Street Banks competitive?

techwatcher

Hi,

I am considering opening a one-year fixed rate account. Looking at the best UK options it seems that lesser-known Banks offer significantly higher interest rate than the High Street Banks - why is this? Smaller organisations and therefore lower overheads perhaps?

Also is their any downside to using a lesser-known Bank such as Paragon?

Linton

My guess is that at the moment banks dont need your money. Why pay rates to savers that are higher than are charged for borrowing on world money markets when industry isnt looking for loans anyway?

The small banks pay more because if they didnt there would be no point for you putting your savings with them. Major banks have good offers on current accounts because current account customers tend to be more loyal and the big banks are fighting for customers.