Nine out of 10 easy access savings accounts pay interest of less than 1% – exposing a “fundamental flaw” in the market, Moneyfacts has said.
The financial information service said that there was a lack of competition among the biggest banks, which account for 70% of the market.
The cost of living is rising at 2.9% a year, so many savings rates are failing to keep pace.
Moneyfacts said people faced a “never-ending battle” for decent returns.
On Tuesday, the Bank of England pointed to the potential dangers from the “benign” economic conditions, highlighting growing levels of consumer borrowing on credit cards and car finance.
The same conditions have led to the paltry rates of return for savers, with the Bank of England base rate having been at a record lows for years.
Moneyfacts found that a third of easy access accounts failed to even pay a rate matching the current base rate of 0.25%.
“It is clear to see that savers have been facing a never-ending battle to get a decent return on their cash over the past few years. Government lending initiatives and consecutive cuts to bank base rate have resulted in savings rates plummeting,” said Rachel Springall, of Moneyfacts.
“To add insult to injury, the governor of the Bank of England’s view is that there will not be a rise to interest rates in the foreseeable future.
“There is a fundamental flaw in the savings market, with a distinct lack of competition among the biggest banks for savers’ cash. Easy access accounts are one of the most popular methods of saving and so it is devastating that 90% of them don’t even pay a 1% interest rate.”