National Savings & Investments has come under fire for paying just 0.01pc to savers holding its "Investment Account", with rival providers offering more than 200 times the rate of interest.
The NS&I account also fails to compete with the average rates for easy-access accounts and easy-access cash Isas, which pay 0.99pc and 1.06pc respectively, according to data compiled by the analyst Moneyfacts.
A saver with £10,000 deposited in this NS&I account would earn just £1 a year in interest, compared with £106 in an average cash Isa.
Anna Bowes, of the analyst Savings Champion, said it was likely that older customers, who are less likely to use the internet, were missing out on better rates, given the Investment Account is postal only.
“There is absolutely no reason why any bank should pay such a poor rate,” she said. “Even within NS&I, savers can do so much better. It’s important not to leave your money languishing in an account with a rate even worse than high street banks.”
Ms Bowes said many older savers found it harder to compare the best deals, as the top rates frequently changed. She said: “NS&I will be hoping that its postal-only customers do not notice how much they can earn in interest elsewhere. It is outrageous.”
Overall, £2.7bn was held across all NS&I Investment Accounts as of March 31 2022, according to its annual report.
At 0.01pc interest, this means that savers using the account would have earned an aggregate of just £270,000 in one year. The same sum in the best-paying postal account would have generated interest of £54m, according to calculations from Savings Champion.
The top postal account was from Yorkshire Building Society, which pays 2.5pc on the first £5,000 and then 2pc on balances above that amount, according to Savings Champion.
The next highest easy-access account is from the Islamic provider Al Rayan Bank which offers 2.35pc – 235 times the NS&I rate. This is followed by Cambridge Building Society, at 2.1pc, according to Moneyfacts.
A spokesman for NS&I said: “We offer a range of savings accounts to suit our customers’ needs and we keep our rates under review. We are not promoting the Investment Account to new customers and have a number of accounts – such as Direct Saver and Income Bonds – that pay a better rate of interest which customers can choose as an alternative.”
The NS&I website currently says that it is not promoting the Investment Account, but invites users to contact the customer service team if they “want to find out more about it”. The Direct Saver account pays a rate of 1.2pc.