The Great British Savings Scandal
by Patricia Montgomery, LincsMag Writer.
Date: 01 November 2010
Savers are mostly unaware that they are missing out on £12 billion* a year because banks are keeping us in the dark about miserly interest rates, according to new research by Which?
The consumer champion found that almost half of the 1,200 plus savings accounts available in the UK pay 0.5% interest or less and one in four pays 0.1% or less** - just £1 a year for every £1,000 saved.
Which? even found two accounts – Ulster Bank’s Easy Access Savings Account and Newcastle Building Society's Nova Plus Issue 3 Account*** – that pay just 0.01%, an annual return of 10 pence for every £1,000 saved.
Banks aren’t being upfront about these poor returns, with few even showing interest rates anywhere on regular statements or telling customers about better accounts***, but Which? is pressing for change**** and has already secured a commitment from Royal Bank of Scotland, Lloyds Banking Group and Santander to improve the information they provide to their customers.
So what can you do? For a start you can take action now and possibly add hundreds of pounds a year to your savings in a matter of just a few minutes by using Which?’s unique Savings Booster – www.which.co.uk/savingsbooster - where you can instantly see what interest your account is paying, if a better rate is available elsewhere and so start to move your money.
Which? chief executive, Peter Vicary-Smith, commented, “Banks are depriving British savers of £12bn a year by keeping us in the dark about the pitiful interest paid on hundreds of savings accounts.
“Whilst we pressure the banks to be more upfront about their rates, people can take action and potentially add hundreds of pounds a year to their savings by moving their money to a better account.”
For details of Best Rate savings accounts, visit www.which.co.uk/savings
Note:
*If people with easy-access and notice savings accounts and cash Isas moved their money to best rate versions of those accounts, British savers would be £12bn a year better off. Using Bank of England savings data and Which?’s own market and rate analysis, Which? calculates that there is a difference of £12bn a year between the interest currently being paid to UK savers compared with the interest they’d earn in an equivalent Best Rate account. That’s equivalent to £322 for every saver with an easy access or notice savings account or cash Isa.
**47% of easy-access and notice savings accounts and cash Isas pay 0.5% or less and a quarter pay 0.1% or less.
***Newcastle Building Society is one of the few institutions to display interest rates on statements.
***Banking Code of Business rules, in force since November 2009, state that banks must inform customers if the rate on their account drops by 0.25% or more in one go (or 0.5% over 12 months). Banks do not have to inform customers with a balance of less than £500, except by impersonal means such as a notice in branches, on their website, or in the national papers.
**** Which? is pressing banks to:
Publish interest rates on all statements – paper and online Clearly display all savings account interest rates online e.g. no more than one prominent link away from the savings home page Provide each customer with an annual notice of savings interest rates, which should include: Current interest rates for all accounts offered by the provider, even those accounts closed to new customers Show in pounds and pence how much savers would earn in each account if they had £1,000, £5,000 or £10,000 A prompt for savers to check their account’s rate plus what to do if they want to switch including a route such as a phone number and web page to help people switch
