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Savers suffer as more accounts pay 0.1% or less

Number of accounts paying paltry rate jumps by 23%

The number of savings accounts paying interest of 0.1% or less has increased by 23% over the past year, leaving millions of savers earning next to nothing on their nest eggs.

A year on from Which?’s Great British Savings Scandal campaign, in which we revealed that one in four accounts in the UK were paying interest of 0.1% or less, the situation has not got much better for savers. While our campaign saw several banks agree to printing interest rates on statements, there’s been little change in rates for existing customers.

There has been some good news for new customers, though. The number of accounts paying 0.1% or less and still open for new savings has dropped by a third, to 77 over the past year. However, the number of accounts closed to new customers (known as superseded accounts) paying 0.1% or less has risen by more than 50% in the past year. On a balance of £5,000, you’d only earn £5 in annual interest in these accounts.

How have interest rates on savings changed?

The table shows how the number of savings accounts paying poor interest rates has changed over the past year. It shows accounts currently available to new customers and those closed to new business (‘superseded’).

How many savings accounts are paying poor interest rates?
  2010 2011 Increase / decrease 2010 to 2011
Accounts paying 0.1% or less
Total number of accounts paying 0.1% or less 313 384 +23%
Superseded accounts paying 0.1% or less 197 307 +56%
Currently available accounts paying 0.1% or less 116 77 -34%
Accounts paying 0.5% or less
Total number of accounts paying 0.5% or less 595 733 +23%
Superseded accounts paying 0.5% or less 341 546 +60%
Currently available accounts paying 0.5% or less 254 187 -26%

Is a superseded account always a bad thing?

A superseded account doesn’t automatically mean you’re earning a poor rate of interest. Changes in the market mean accounts are now available to new customers for shorter periods before they’re withdrawn. As a result, many savings accounts become superseded while still paying a competitive rate of interest, usually thanks to a one-year bonus rate.

The downside is that you’re unlikely to be earning the interest rate currently advertised online and in-branch, particularly when the introductory bonus rate expires and the rate you’re earning plummets. You should regularly review the rate you’re on. Switching your £5,000 in savings from an account paying 0.1% to a Which? Best Rate account (currently paying 3.1%) would boost your annual interest from £5 to £155.

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