Savers are missing out on more than £12bn a year by keeping their money in accounts that pay miserly rates, according to new Which? research.
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. Find out how much interest you could be missing out on by using the new Which? Savings Booster.
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. That’s equivalent to £322 for every saver with an easy access or notice savings account or cash Isa.
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.
Switch to a better savings account and earn £100s extra
Which? chief executive, Peter Vicary-Smith, says: ‘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.’
Few banks show interest rates on statements
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.
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
Use the Which? Savings Booster to earn more on your savings account and cash Isa
Consumers can take action now and could add hundreds of pounds a year to their savings in just a few minutes. Using Which?’s unique Savings Booster, savers can instantly see what interest their account is paying, if a better rate is available elsewhere and start moving their money.
Take action: Facebook, Which? Conversation and the Which? Savings Surgery
Which? is holding an online Savings Surgery on Thursday 28 October from 12-2pm, where its money experts will be on hand to answer consumers’ savings questions and queries. To get involved, register now and join us on the day at www.which.co.uk/savingssurgery
We also want to hear your views on the paltry savings rates currently being paid to millions of us. Have your say with Which? Conversation and join the Facebook page The Great British Savings Scandal.
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