If you have money stashed in a savings account, no doubt you’d expect to hear from your bank or building society if it decided to cut your interest rate. However, many financial institutions aren’t keeping their customers in the loop on this crucial issue.
Some continue to use old-fashioned methods that leave people in the dark about the returns they are earning, and just four in 12 of the banks and building societies recently investigated by Which? Money promise to personally inform their customers of all rate changes.
So how would your bank or building society let you know of a drop in your savings interest rate?
Savings rates: how banks inform you of changes
|Interest rate changes|
|Bank of Scotlanda||No||No||Yes||Yes||No|
|Cheltenham & Gloucesterb||No||Yes||No||No||No|
- Don’t guarantee to give personal notices
- Guarantee to personally notify customers of all rate changes
The table shows which banks guarantee to personally inform you if they cut your savings rate by less than 0.25% and no more than 0.5% in a year. Most banks use impersonal methods to communicate smaller rate changes as shown in the right side of the table. Bank of Scotland, Co-op, Halifax and HSBC say they may or may not inform you personally.
Savings providers with poor communication
Although most banks promise to personally inform customers of larger rate cuts, many banks will not make personal contact if they’re cutting rates by 0.25% or less, or if rate cuts are linked to movements in the Bank of England base rate. Barclays, for example, will personally notify customers of all rate cuts – except on its tracker savings accounts.
When HSBC makes small rate changes of 0.25% or less, it says it will either put up signs in its branches, publish news of the cuts in three national newspapers – typically the Daily Mirror, Daily Mail and Daily Telegraph – or let customers know in person.
Bank of Scotland and Halifax also say they may – or may not – notify customers directly of rate changes, so it’s difficult for consumers to know what to expect from these banks.
When Lloyds TSB makes smaller savings rate changes, three national newspapers – usually the Daily Telegraph, the Daily Record and The Sun – will carry this information. Lloyds will also make the details available in branch, on its website and via telephone banking.
However, customers can’t necessarily expect to receive personal letters or emails altering them to any rate change by Lloyds TSB.
Meanwhile, Santander undertakes only to ‘[display] a notice in the national press or (for branch-based accounts) in our branches, or on our website.’ when it makes smaller rate changes. The bank says: ‘If we put a notice in the press, we will use two national newspapers.’ It does not specify which newspapers will carry information about rate changes.
Again, there is no guarantee customers will hear about any changes to their savings rates, and Santander does not take responsibility for informing customers about rate changes personally.
Banks that promise to inform savers of rate changes
On the other hand, some banks and building societies including Cheltenham & Gloucester, Co-op, First Direct and ING Direct promise to let you know personally of any changes to your savings rate.
This notification might take the form of a letter or an email.
Significant savings rate changes
The rules around when banks and building societies have to notify savers of rate changes are complex, and depend upon how much your savings account provider cuts your rate by as well as how much money you have in your account.
If your account rate is cut by more than 0.25% in one go and you have at least £500 in your account, you should get advance warning of the change (between 14 and 30 days). Meanwhile, any cut that, combined with previous rate changes, means your overall savings interest rate has dropped by 0.5% in 12 months must be flagged up with you.
Nevertheless, with the Bank of England base rate still at just 0.5%, these rules still allow financial institutions to make proportionately large cuts to customers’ savings rates without telling them.
Find a better savings account
Which? Chief Executive Peter Vicary-Smith said: ‘Our rigorous research shows that outdated and inconvenient methods of notice on interest rate changes are keeping savers in the dark for longer, at a time when they need greater disclosure than ever before.
‘This is just another example of banks treating their customers badly. As our latest savings satisfaction survey shows, once again it’s the smaller players that offer better service and happier customers.’
You can read the results of our latest savings satisfaction survey by visiting the Which? savings accounts review, which also features a round-up of the providers offering the most consistent savings rates to consumers.
Which? Money editor James Daley commented: ‘To avoid suddenly finding your savings rate has shrunk, it is crucial to check the return you’re earning on a regular basis and switch your savings account if you’re getting a poor deal. Alternatively, for those people who aren’t inclined or able to review their rate so often, a consistent savings account or fixed-rate bond might be the best bet.’
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