A savings account that pays 0%
... and NINE others that offer next to nothing. No wonder savers don’t know where to turn
BANKS are allowing loyal savers’ money to languish in old accounts that pay next to nothing. One firm is now even paying customers in its easy access account ZERO per cent interest.
Last week, as part of our Stop ShortChanging Savers campaign, we told how savers were being deprived of £1billion in interest this year because banks have stopped playing fair.
Today, Money Mail reveals the ten lowestpaying accounts where savers’ nest eggs are being left to waste away.
The worst-offending savings account, an old easy-access deal from FirstSave, provided by FBN Bank UK, now pays 0 pc.
This is despite a statement on the firm’s website which reads: ‘We don’t believe in offering a high interest rate, then reducing it as soon as you’ve agreed to invest with us.
‘With a FirstSave Easy Access Account, you’ll get a consistently favourable rate of return, with easy access to your money whenever you need it.’
Meanwhile, CitiBank’s old issues of its Flexible Saver account pay a pittance at 0.01 pc, as do old accounts with Danske Bank’s SaverPlus.
The most paltry rates are typically paid on old accounts now closed to new customers.
Over time firms chip away at the rate, which means savers who fail to switch deals regularly almost always end up on a worse deal.
The same banks and building societies then relaunch their accounts with better rates for new customers.
Today, the best-known banks now all offer a range of rates within their own accounts that vary by as much as 1.33 pc.
Our sums show savers with £10,000 could be missing out on as much as £133 a year because their money is not held in their bank’s most generous account. Banks have continued to keep their savings rates stubbornly low despite an increase in the Bank of England’s base rate last year to 0.75 pc.
Money Mail is now calling for banks to be forced to pay a basic savings rate to protect loyal savers.
We also want to see an end to the loyal penalty that allows banks to give their best rates to new customers, the introduction of a no-hassle switching service and a stop to misleading marketing tricks that sell savers short term deals that are no good in the long run.
The FCA is looking at the savings market as part of a wider investigation into how loyal customers lose out.
It says savers could gain around £300 million a year from the introduction of a basic savings rate.
The watchdog’s research found that long-standing easy-access account holders tend to receive interest rates 0.82pc lower than new customers.
Despite this, just 9 pc of savers had switched accounts in three years.
James Daley, founder of Fairer Finance, says: ‘Although we’re in a low interest rate environment, there is no excuse for banks cutting rates for loyal customers all the way back to zero or 0.01 pc.
‘Customers understand that headline rates tend to fall after the offer period comes to an end but it is a step too far to stop paying interest at all and shows contempt for loyal customers.
‘The right thing for these banks to do now would be to close these accounts down and move customers into an ordinary instant-access account paying a reasonable rate.’
Citizens Advice has estimated that savers are missing out on £48 each on average for failing to shop around for a better deal.
Chief executive Gillian Guy says: ‘Other markets, such as energy and mobile, have shown action can be taken to tackle this systematic scam. It’s time loyal savers get better protections, too.’
Rachel Springall, finance expert at data firm Moneyfacts, says: ‘In an ideal world it would be great to see an automatic switching process for savers sitting on a poor rate to move to something better with that provider, or indeed for savings providers to reward existing savers with a better rate for their loyalty.’