The Chancellor’s 2014 Budget was packed with positives for savers, including an increase in the ISA limit. But there are billions of pounds still stuck in substandard savings accounts – and its time for action.
The savings industry needs to do more to better serve savers. We’re launching the Scrap the Savings Trap campaign calling on banks and building societies to step up and instigate changes that will make it easier for customers to make the most of their savings.
You see the savings market has some significant problems. Our research has found that in the current savings and cash ISA market, 82% of the 1,999 easy access savings accounts and cash ISAs are closed to new customers. Four in 10 of these pay 0.5% or less, of which 41% pay a pitiful 0.1% or less.
Sorry savings accounts closed to new customers
Many of these ‘zombie’ accounts have been superseded by newer versions, often with similar sounding names, offering attractive rates to new customers while at the same time reducing the rates for loyal existing customers. This is something Convo commenter Lessismore is all too familiar with:
‘It is hard to keep track of accounts with all their silly names. No wonder people get fed up with it and put their cash elsewhere. All you want is a decent rate of interest on the money you are loaning the bank!’
Take Halifax’s ‘Reward Saver’. This account pays up to 1.70% for a balance of £5,000.. But if you’re unfortunate enough to have the ‘Saver Reward’ you’re looking at a pitiful 0.1%. And Halifax aren’t the only ones. AA’s ‘Internet Saver (Issue 1)’ pays 1.36% for a balance of £5,000 while their ‘Internet Savings Account (Issue 1)’ pays 0.1%.
Calling for changes to the savings market
We’re calling for changes that ensure that banks and building societies don’t leave customers languishing in sub-standard savings accounts. We want them to close ‘zombie’ accounts, and stop them dumping customers savings into poor value savings accounts and ISAs at the end of fixed terms. Instead they should move people’s money into one default easy-access or ISA account.
We also want to improve the ISA switching process so it’s not as complicated and laborious. Finally, we’re asking savings providers to do more to help their customers get the best deal by putting interest rates clearly and consistently on all communications, improving notifications about the end of bonus rates or fixed terms, and ensuring better offers are promoted by staff and in statements.
Do you have a savings account or cash ISA that has seen better days? Do you know what you’re earning on the money you’re managing to put away? We’d love know what you think about the current market to further inform our campaign.