Three major savings providers are getting rid of hundreds of accounts that pay miserly interest rates. The time for the rest of the banking industry to follow suit is well overdue.
When we launched our Great British Savings Campaign back in 2010, we found that savers were missing out on a shocking £12bn in interest. This was because their accounts were paying them miserly rates as low as 0.1%.
When we repeated our investigation last year, we found that savers were now missing out on a more significant £12.8bn of interest. The sheer number of accounts on offer to savers is befuddling.
An army of undead accounts
Of the 1,800 instant-access and notice cash Isas and savings accounts we looked at in 2012, just shy of 1,300 were closed to new business. These zombie accounts – also known as superseded accounts – often pay pitiful interest rates. Some 564 of them paid 0.5% or less, while 313 paid 0.1% or less.
So Barclays, Newcastle Building Society and Santander should be commended for committing to simplify their savings ranges and heavily reducing the number of their accounts.
Barclays has contacted just under one million savers with money sat in seven types of account to move them to one product, while Newcastle is moving customers spread across 31 account types to just five. Santander will also collapse 81 accounts (and issues of accounts) into five.
In many cases, savers affected by these changes will end up on the same or a better interest rate. But the long-term impact is that customers have a less confusing product choice.
Banks should resurrect our savings
It’s time other banks and building societies did the same. Banks have got away with offering loyal customers low interest rates on a confusing array of products for too long.
It’s high time they took a proactive approach to do something positive for their customers. That’s not too much to ask, is it?
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