Always get the top savings rate? Banks hate you

Banks, especially the biggest banks, dislike the small minority of savers that move their money frequently because they see them as "a less stable form of funding", the Financial Conduct Authority (FCA) interim report on cash savings says.

"These consumers are more likely to switch to a higher rate product in the short and medium term."

Or, in other words: these consumers can't be relied upon to let their cash fall into zombie accounts with very low interest rates.

Top interest rates? Too much effort

The report also reveals that a number of banks avoid putting themselves too close to the top of the best buy tables because they don't like getting a lot of new customers.

The "inflow of deposits" that result from offering higher interest rates "would stretch [banks] operationally", apparently.

Given how low switching rates on savings accounts are, it apparently doesn't take all that much to over stretch the banks.

SOURCE: FCA interim report into savings 8/7/2014. Data from GfK NOP study of 17,830 savers.

In the year to December 2013, just 3.1% of those with a savings account or cash ISA switched to another provider, and fewer, 2.8%, switched to a better account with their current bank.

So the 'too much effort' excuse looks pretty thin, except when it's combined with aversion to 'rate chasers', who, it turns out, make up a really large proportion of all switchers.

About 59% of people move savings account in order to get a better interest rate, according to a 2013 Savings Council report.

And the vast majority of all switchers, about 50% according to the same survey, are 'rate chasers' who move every few years to get the best interest rate in the market.

As you might expect, these 'rate chasers' are doing much better than the average saver: they make more monthly deposits, they know more about the interest rates they get and, most crucially, they earn much more in interest.

They're also much more likely to take their savings away from the big four.

'Rate chasers' love small banks

At the UK's biggest banks, 'rate chasers' make up about 10 to 15% of savers.

At smaller providers, over 40% of customers are there because they switched for a top rate, and are likely to leave within a few years if their initial rate drops off and better savings rate are available elsewhere.

This makes sense given that smaller and new providers are heavily reliant on getting new customers to switch to them and that bigger banks are actively averse to the same thing.

But it's bad news for UK saving in general: the big banks are fundamentally committed to keeping huge numbers of savers on the books for years and paying them very little interest.

Seriously, very little interest

If that seems like a melodramatic conclusion, consider those very low switching rates from earlier alongside these charts showing how quickly and dramatically interest rates on the most popular savings accounts - easy access and cash ISAs - drop in just a few years.

SOURCE: FCA interim report into savings 8/7/2014. FCA data.

As you can see, in the case of easy access savings accounts there's a dual problem: not only are the big banks' interest rates dropping off over time, they're also significantly lower, on average, than other providers'.

SOURCE: FCA interim report into savings 8/7/2014. FCA data.

The big banks, it almost goes without saying, holding the vast majority of UK savings accounts.

Most savings accounts in the UK, 82% of accounts opened in 2013, are opened with a provider that the saver had an existing relationship with.

In most cases, 57%, that existing relationship was a current account.