Gold and platinum accounts – how looks can be deceiving
Savings accounts with names like ‘Extra High Interest’, ‘Midas Gold’, ‘Extra Special’ and ‘Triple Gold’ all sound promising, don’t they? But then you see the paltry interest rates on offer, and they’re all a bit of a let-down.
Take NatWest’s sparkly-sounding Diamond Reserve savings account, paying just 0.1% interest. So, for every £100 you save, you’ll get just 10p in annual interest.
On a similar theme, First Direct might implore you to ‘sit back, relax, and let the rewards come to you’ with its Bonus Savings account. But don’t get your hopes up – even if you don’t make any withdrawals, you’ll also get a rate of just 0.1%. And if you do need to take some money out of your account, your rate will halve to just 0.05%.
Overpromise and underdeliver
Here are my top five savings account names that sound far grander than the rates they deliver:
- Danske Bank pays a slightly higher, but still paltry 0.1% on its Midas Gold account
- NatWest’s Diamond Reserve also pays 0.1%.
- Dudley Building Society’s Extra Special account pays 0.05%
- First Trust Bank (NI)’s Cash Stash also pays 0.05%
- Cambridge BS pays 0.05% on its Instant Sapphire account
There are some grandiosely named savings accounts that are less stingy if you’re able to save more. For example, the Extra High Interest account from Julian Hodge Bank pays just 0.1% interest on £1,000, but a more respectable 2.7% on a balance of £10,000. Halifax/Bank of Scotland’s Extra Income Saver, on the other hand, only boosts its rate from 0.1% to 0.13% for balances of £5,000-£25,000.
If it sounds too good to be true…
Many of the savings accounts that pay insultingly low returns used to pay more once upon a time. For example, in September 1997, the NatWest Diamond Reserve account was paying 4.59% AER, while the Halifax Liquid Gold account paid 3.7% on balances of £3,000. Neither matched the best deals available at the time, but they were far better than the current advertised rates of 0.1% and 0.05% respectively.
While the oxymoronic account names are quite funny, there is a real risk that savers could be misled by a product’s glitzy-sounding label. This is particularly true where these accounts once offered good value. The new regulator, the Financial Conduct Authority (FCA), needs to clamp down on misleading product names, and providers need to offer fairer interest rates or withdraw their products.
Have you spotted any savings accounts where the bling name isn’t matched by the reality?
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