/ Money

Time to eradicate zombie savings accounts

Zombie hand coming out of the ground

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 These zombie accounts – also known as superseded accounts – often pay pitiful interest rates.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?

Comments
Guest
satish says:
24 June 2013

You could say – use only that suit you. If the money is in poor paying account then only you be blamed.

Guest
richard says:
24 June 2013

Rubbish – I want several savings accounts as it is easier for me to keep track of “ring fenced” savings for long term purposes – I am getting tired of other people dictating to me what I can and cannot have – particularly on Which?” – advice yes but NOT dictating.

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Guest

I like having multiple accounts, but I am sick of building societies paying insulting rates ‘just because they can’.

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Guest

I’ve just had a look at the interest rate on a Santander account. It will be changing name and the interest rate will fall from 1.25% to 0.5%. I wonder if they will let me know.

And Gareth reckons that Santander should be commended. 🙁

I am heartily sick of companies offering enticing rates and then reducing the interest rate, relying on the fact that many will take months or even years to notice what is going on. It’s well established that you have to keep an eye on money invested in shares etc, but why should companies be allowed to offer new accounts offering decent interest and pay virtually nothing on superseded accounts.

Profile photo of lessismore
Guest

Not happy with Santander. We had ISAs and weren’t ready to move them with all the other family crises we were having at the time. We didn’t want to pay anything in that year as we were moving money into an ISA elsewhere – and we’re not allowed to put money into two ISAs in one tax year.

We visited the Branch and jumped up and down with our passports – we’re here – we’re alive – we ‘re just busy at the moment – we don’t want our accounts made dormant. Fat lot of good that did us. Now we will have to go searching for dormant accounts. We don’t want the hard sell every time we walk through the door. Remind me who the customer is!

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!

Profile photo of wavechange
Guest

Transferring money to another ISA does not affect your ISA allowance for the current year, though one well know company (I cannot remember which) told me otherwise.

I agree about silly names. Just as bad is when the current 11th issue pays reasonable interest but the ten previous issues do not. 🙁

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Guest

I should have added that they were insisting that the only way we could stop this was to pay money in.

When we complained we received a reply from them completely misrepresenting our complaint.

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Guest

I wouldn’t mind so much the number of different accounts, if they would just list them clearly, with interests and conditions displayed in a consistent manner. However, it often seems that they go out of their way to hide and obscure the details on their website, and spread the different account types and customer types across different parts of the the site, making comparing virtually impossible. (I’m with HSBC, but have had similar (and sometimes much worse) experiences looking at other bank websites, when I’ve considered moving bank.

Guest
Tony N says:
2 July 2013

I agree with svendhhh, Although many banks & B Societies have improved recently I have often found and still find it difficult to find out the current interest rate or when the bonus period ends. Often one year introductory schemes have to be applied for and it can take weeks until the account is set up, so when is the year end, when you apply or when you make the deposit?
I have one savings account that I opened just before the global financial crisis which offered an interest rate that tracked the base rate plus a bonus for making regular payments and not withdrawing. Four (or more) years on and I am still getting the bonus which is better than most interest rates on its own but cannot find any info on when the bonus will end if at all nor what is the bonus rate. Calculating the bonus rate paid annually when I have to make regular deposits through the year is a chore and I am sure there was an end date for the bonus. Why make thing so difficult?