New Which? Money research has found that more savings accounts come with introductory bonuses than ever before.
More than one in 10 savings accounts now offer interest rates which plummet within six or 12 months of being opened, with the worst offenders slashing rates by up to 95% when the bonus deals expire.
The findings show that 11% of instant-access savings accounts and 14% of instant-access cash Isas come with attached bonus rates that fall off after three, six or 12 months.
Biggest savings account drops
The table below shows the six worst-offending savings accounts for interest rate received once the bonus period has ended (rates correct at 24 June 2011). For example, a 2.1% rate of interest with the Post Office plunges to just 0.1% after 12 months – a 95% drop.
|Worst accounts for dropping interest rates|
|Post Office Instant Saver||2.10%||2.00%||12||0.10%||95%|
|Lloyds TSB eSavings||1.60%||1.50%||12||0.10%||94%|
|Lloyds TSB Easy Saver||1.60%||1.50%||12||0.10%||94%|
|Halifax/BoS Web Saver Reward||2.80%||2.55%||12||0.25%||91%|
|Barclays Everyday Saver||0.65%||0.55%||12||0.10%||85%|
|Santander eSaver Issue 3||3.00%||2.50%||12||0.50%||83%|
Bonus culture on the rise
It’s a marked contrast to the situation 10 years ago when, of the 490 savings accounts then available, only 13 paid a bonus (3%). And of the 117 cash Isas on the market, just three carried an introductory rate (3%).
Which? researcher Alex Kouzarides said: ‘While savers should be encouraged to take full advantage of the providers’ approach to bonuses, they need to be on their toes. With bonus accounts now rife, it pays to be ready to switch when the introductory deal on your account ends to avoid being left on a low interest rate.’
Which? Savings Rate Booster
Which? has created a free Savings Rate Booster. This is the only place where savers can quickly and easily find out what interest their account is paying, compare it with the best on the market and start moving their money.
To find out how much extra interest you could be earning on your savings, try out the Which? Savings Rate Booster now.
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