A quarter of all savings deals launched by lesser-known ‘challenger’ banks in the past 12 months were pulled from sale within two weeks, with some offers disappearing just a day after launch, new research from Which? Money has found.
These include Ford Money’s Regular Saver, which attracted plenty of attention when it launched on 22 May. Paying interest at 4%, the account became the best regular savings deal open to all savers.
Not only was the launch covered extensively across the personal finance media, but it also generated a spike in internet searches for the company. Between 21 and 27 May, Google searches for Ford Money were more than seven times higher than two weeks before.
However, savers searching for the account on 23 May would have been disappointed: Ford Money closed it to new customers after just 24 hours.
We analysed a year’s worth of Moneyfacts savings account data. Out of the 1,934 accounts closed between 1 June 2016 and 31 May 2017, 277 were closed within 14 days. Some 270 of these were fixed-term accounts, six were instant-access or notice accounts and one (Ford Money) was a regular saver.
We also found that nine other table-topping deals were withdrawn within 24 hours.
These included offers from Al Rayan Bank, Atom Bank, Post Office Money, Secure Trust Bank and Yorkshire Bank.
Four of the nine deals were offered by OakNorth Bank. In fact, half of all savings deals launched by OakNorth in the past year were pulled within a fortnight.
Find out more: How to find the best savings account
Disappearing savings deals
The trend for short-lived savings rates is less apparent among the bigger players in the market. In the past year, around one in 10 deals from non-challenger banks were withdrawn within a fortnight of launching.
Out of the 10 major high street savings providers, only TSB (one account) and Nationwide (six) closed accounts within 14 days.
Smaller providers, however, seem to be taking advantage of the free promotion generated by briefly offering the best account on the market.
A prime example is Ikano Bank, whose five-year fixed saver offered 2.35% from 31 March. This meant that when the government launched its three-year NS&I bond paying 2.2% on 11 April, much of the press coverage mentioned Ikano’s account as a longer-term option offering a slightly better return. However, the rate was withdrawn two days later.
This pattern means there’s a quick changeover at the top of the savings tables. Between 15 March and 15 May this year, six different accounts topped the table for one-year fixed-rate deals:
Which? Money says
There’s no doubt that lesser-known banks have shaken up the savings market with their table-topping rates – currently, the best fixed-rate deals are all offered by challengers.
But offering attractive rates that only last for a matter of days seems like a cynical move designed to generate publicity. We’d like to see providers being more transparent when launching a deal that will only be available for a limited time.
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