Why are Natwest interest rates so Low?
Traditionally, the main high street banks, NatWest, Barclays, LloydsTSB and HSBC, plus in Scotland RBS, Bank of Scotland and Clydesdale, didn’t pay interest on credit balances. Their view was that free current account banking was offered in lieu of interest. However, around the mid 1980s the laws governing building societies was changed to allow them to offer current accounts and credit cards. In order to grab market share, they did offer competitive rates of interest on their current accounts. Quite remarkably, these interest bearing accounts didn’t get enough market share to convince the big banks to change their ways quickly. Some, such as HSBC, found an alternative route by creating a free-standing Internet bank to compete with the building societies. In recent years, Nationwide and Abbey, in particular, have gained market share and the big banks began to offer better rates of interest, often with strings attached, such as an account management charge. However, Natwest has been the
