Many of you got involved with our campaign for better savings interest rates. But have you heard the one about misleading savings account names? It may pay to steer clear, even when they sound impressive.
If you had all your money in a savings account called “Extra High Interest”, you could be forgiven for thinking that you were doing pretty well. Or how about an account called “Liquid Gold”? Sounds impressive.
But if you do have your money in a savings account with a fancy name, you’d do well to check the interest rate. The more elaborate the name, the more likely you are to be earning next to nothing.
How much you could earn on savings
Take the Natwest Diamond Reserve account, for example, which is currently paying savers a rate of just 0.1%. Or the Norwich & Peterborough Supersaver, which is paying exactly the same – just 0.1%.
Worst of all is the Newcastle Building Society Extra High Interest Account, which pays a sorry 0.01%. That’s just 10p of interest a year for each £1,000 you’ve got stashed away.
Over the past few years, banks have become increasingly adept at this game of smoke and mirrors – dressing up products to appear much more attractive than they actually are. It’s because of this that we launched the Great British Savings Scandal campaign to draw people’s attention to just how much interest they could be missing out on.
We found that, en masse, British savers are missing out on over £12bn in lost interest every year. That’s an average of £322 for each UK saver.
The sorry state of savings accounts
When I wrote about this a few weeks ago, your comments flooded in. ‘My Nationwide cash ISA rate has been dropping like a stone for the last few years to 0.25% currently,’ reported Bill. Charlotte used our savings booster tool to find that ‘my postal ISA with Santander is earning 0.1%. I also have not had a statement from them since 2008… I am shocked and disgusted but not at all surprised.’
While we were glad you spoke out about your own poor savings rates, we aren’t at all pleased that so many of you are in this situation.
My advice is to take everything you hear from your bank or building society with a healthy dose of scepticism. There are some good products out there, but it’s safer to assume the worst, and then let yourself be surprised on the upside.
If you haven’t switched your savings account recently, try using our savings booster tool to find out how much interest you’re missing out on.
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