Weasel words that prove banks hide truth about rock-bottom savings rates
‘DOESN’T time fly . . . your Regular Saver is about to mature,’ reads the letter from First Direct.
‘Believe it or not, it’s almost 12 months since you opened your Regular Saver account and during that time you’ve been enjoying a fixed rate of 5 pc.
‘We just wanted to let you know what happens next.’
The letter goes on to say that my balance will be transferred to a new ‘savings account’ along with my interest.
Great — but what rate will it pay? My old deal of 5 pc is clearly highlighted in bold print. But I can’t seem to find details of the new rate . . .
Why? Because it is plummeting a jaw-dropping 97 pc to just 0.15 pc — and no bank in its right mind would want to publicise that.
Instead, this crucial information is buried in the following eight pages of terms and conditions also included in the envelope.
Putting on my best impression of a greedy banking executive, I could argue that the information is there to be found. It’s not the bank’s fault if you don’t go looking for it.
But it is exactly this sort of sly, cynical behaviour that prompted us to launch our Stop ShortChanging Savers campaign in September. For years, banks have treated loyal savers like cash cows. They are knowingly sitting on vast stacks of the nation’s savings, yet failing to pay fair rewards.
In fact, our research shows that, had banks kept their rates in line with the Bank of England’s, savers would be more than £1 billion better off this year alone.
But, while the paltry rates are disappointing, the underhand tactics used to keep savers in rotten deals are inexcusable.
Savers are routinely forced to decipher thousands of words in jargon-filled small print to make sense of their accounts. Some terms and conditions run to an astonishing 20,500 words, while others use a tiny type size or require customers to have a far higher reading age than the national average to make sense of them.
To be fair to First Direct, at least it uses a clear, decent-sized font for its paperwork. But failing to publish such a terrible rate on its covering letter is unforgivable.
For years, Money Mail has railed against banks offering so- called ‘teaser’ deals that later drop off a cliff. Some rates include a juicy bonus, which is removed after the first year, leaving customers earning as little as 0.05 pc. Another trick is to move you into another account with a much lower rate after a year. This is what banks such as First Direct do to regular savers like me.
Regular saver accounts are a brilliant way to start a savings habit. You commit to putting aside a set amount each month and, by the end of the year, you’ve built up a decent little nest egg.
For some time, First Direct has offered its current account customers a top 5 pc rate. You can save between £25 and £300 each month, earning you a maximum of £97 interest on £3,600.
Because you can’t withdraw money during the year without losing your top rate, it’s a great way to stay disciplined. But you have to remember to move swiftly once the year is up, or your money will end up languishing in an account paying next to nothing.
As a personal finance journalist who has written about savings for many years, I know this.
However, a regular customer, who may be tempted to think that loyalty is valued and rewarded by banks, could easily think they will be fine staying where they are.
Nowhere in my letter does it suggest my rate is about to plummet and that I need to act now to avoid earning a pittance.
It’s all so casual — ‘we let you just know wanted what to happens No rush, next’. no panic. Nothing to see here.
Given that the top easy-access account currently pays 1.46 pc, 0.15 pc should be written in bold and red, with a giant exclamation mark next to it.
In the letter, I am also given the option of having my money moved to an Everyday e-Saver, but there is no further information about this account or its rate. And the bank conveniently fails to mention it has almost halved its Regular Saver rate for customers who want to open another one. It has other, much better deals available than its measly 0.15 pc — its cash Isa pays 0.85 pc — but once again, it’s up to you to dig them out of the terms and conditions. A spokesman claims the bank avoids printing savings rates in the letters because these can change, and it wants to reduce the risk of mistakes by keeping rates separate. But he adds: ‘We are always happy to receive constructive criticism and will relook at the wording to see if it could be made any clearer.’ Until the financial watchdog puts an end to this sort of behaviour, it’s on you, dear reader, to watch your savings rates like a hawk. And, if they’re everything I fear they’ll be, vote with your feet — you can be sure I’ll be doing just that.