/ Money

Easing the savings trap

Proposals announced today would force firms to give clearer information to savers about the interest rates on their cash savings accounts and when they change – including the end of bonus rates.

A few years ago, I had some extra cash so I found a bank offering what was then a market-leading ISA. So far, so savvy. Feeling smug, and certain my money was working hard, I paid little attention to the account.

Fast forward 18 months and could I tell you what interest rate my ISA was paying? No chance. So I looked for it.

The rate wasn’t on my last statement; nor on my online account. Half an hour later I found it – buried in a hard-to-find page of my bank’s website. My smugness disappeared. The rate had dropped like a stone.

Such experiences were all too common – so in 2014, we launched a campaign to scrap the savings trap. At the time, you told us what you wanted to see.

Among those who commented was Malcolm who said:

‘I want the banks to tell us, with notice, when an account’s interest rate will change, and I would like to see bonus rates that expire after a year stop.’

Well, it looks like the Financial Conduct Authority’s (FCA) been listening – judging by proposals it’s announced today.

What changes are planned for savings accounts?

The regulator will force firms to provide clearer information on the interest rates on their cash savings products, and make them clearly alert customers to changes, including the end of bonus rates.

It’s also making it easier and quicker to switch between providers. No doubt it’s heard horror stories from people who’d tried to switch ISA providers to get a better deal then found it took months, with anxious periods when it appeared as though their savings had disappeared altogether.

Banks and building societies have left customers languishing in poor-value savings accounts for far too long.

Today’s move is a significant win for savers. Many people never switch savings accounts because they think it will make little difference, so it’s good that the FCA has listened to our calls to make savings providers do more to help you get a better deal.

The FCA is also proposing to publish information to highlight firms who pay poor interest rates to longstanding customers.

You might wonder what impact this will have now, when interest rates on savings accounts are pretty pitiful.

But things will improve, and when they do, you should now be a bit more confident that your savings provider, and the regulator, will be doing more to make sure you’re getting a good deal.

What do you think of the planned changes?


Very very very fed up with the financial institutions. During the time I had a mortgage paid high interest rates which effectively prevented me from moving to a better property. Retired with a small to moderate amount of savings and was hoping decent interest rates(as in the past)would help supplement my pension to help me live. I feel I was screwed on my mortgage and now again with my savings. Yes it is good WHICH to be onside,but the extremely pathetic rates on all ISA s will not help. Please can someone tell the Government and the general public that not all retired people are living a comfortable life. We have suffered in the recession,although in a different way to other sectors of society.

The trouble with safe savings accounts is that if the banks don’t need to borrow money from you – because they have enough from other sources – then they will not offer attractive interest rates; they are commercial organisations. Other organisations may give better rates – peer to peer lending for example. Or invest in the stock market – return should be around 3.5%. It all depends on how much risk you want to take. To make your money work for you, you need to do some digging around.

If you have savings and a mortgage look at an offset account where you only pay interest on the difference.

I’ve just had an email from M&S Bank offering me a loan at their “lowest rate ever” – 3.6% APR. No arrangement fees or “hidden extras”. Just shows the state of the market.

Maurice Lipson says:
24 July 2015

I once had a fixed rate ISA with Santander, when it had matured they never let me know of any options that I could have put it in. They just put it in an account that paid next to nothing, when I found out I transferred it to another bank. I have never used that bank again and never will.

I am with Lloyds bank and have been caught out when the bonus rate ended due to not being alerted by Lloyds and the fact that finding the rate is like going on a treasure hunt!

Harold Watson says:
24 July 2015

I must be one of thousands of MUGS
Been with Barclays for over 50 years no loyalty from them or any other bank.
Time for change but where, they are all the same.

4caster says:
24 July 2015

Low interest rates have been a deliberate policy of all governments and central banks since the great recession of 2008. The policy is known as “Financial Repression” and was introduced to protect borrowers including those who took 125% mortgages, self-certified mortgages, (“liars’ loans”), and to prevent a house market crash and a depression like the 1930s.
In other words savers are penalised to pay for the folly of those who borrowed too much.
Banks should be made to be transparent. They should give their better interest rates to loyal customers rather than prioritising new ones, then we would not have to go through the ridiculous procedure of changing banks every year or so.

The interest rates paid to savers by the big banks just goes to prove that along with the utility companies, insurance companies and the large supermarkets, and some government departments survive under the umbrella of a vast UK firm known as SPIVS R US.

The fat fat cats are greedy! of course we would better rates if they didn’t have such FAT bonuses and other perks which are too numerous to mention. Having worked for a big bank I know !!

The only good thing about low interest rates is mortgages are also low therefore helping people to buy homes.

Good campaign thanks for leading the charge. I feel sorry for the millions of old pensioner savers with their well thumbed savings books paying premium charges for cheques and getting diddly squat on interest income and not realising or unable to move to better arrangements. Sure that nice girl behind the counter keeps reminding them they could do better but practically none of them have got a clue or a computer to get them out of this con. No savings account anywhere should be paid an interest rate lower than the current bank rate as a big starter to getting their act together.

About eight years ago my wife and I moved into a retirement block of flats, living on the interest from our savings and two pensions. Interest rates have halved and now my wife has died and I have to try and survive on what is left because moving, even in this complex, is a very expensive business. The Government award themselves a 10% pay increase; the bankers and top executives are doing very well, etc. Will there be any crumbs left for us in the end!

Tony Palmer says:
24 July 2015

Does anyone know WHO are the worst interest payers for savings. If I, as a retired person, have say a small sum li8ke £15,000 any suggestions what I should do with it? Or even, what I definately SHOULDN’T? Does anyone know who are the BEST interest payers for small amounts of savings.
Any help for an old inumerate Dyslexic would be appreciated!

Tony, Which? regularly publishes savings rates in Which? Money and occasionally I think. in the main magazine. If you don’t subscribe (and their subscription will use up half your interest 🙂 ) try Martin Lewis (moneysavingexpert.com).

At the moment it seems the best you’ll get in a safe saving account is 1.35% for instant access, 1.9% if you leave them a year, or if you are over 65 then NS&I guaranteed growth bonds give 2.8% (are they still available?).

With a savings account then you’d get £200 to £300 a year. Personally I’d buy some Premium Bonds with some of it – but I’m an optimist.

Norman McGill says:
24 July 2015

Am particularly pleased that Which?has pushed hard for the government to take action on the banks and their savings traps. What I find bewildering is….why has Which ?, taken so long to do something about this. After all,the rediculous interest rate problem has been with us for some years now?

Ednab says:
24 July 2015

Interesting re the comments on Nationwide. I shall need to check further as my savings are with them. I fully agree with Which
We the public have been badly used by the banks etc, now hopefully we will be treated with more respect.

Paul Hadfield says:
24 July 2015

It’s about time there was a different structure for pensioners who have saved all their working lives for a decent living pension with decent interest rates, or :-

Reduce foreign aid & think about the people who have worked all their lives in the UK.
Family allowance for the first two children ONLY. Married couples ONLY.
No further hand outs for single unmarried pregnant mothers, including subsidised homes etc.etc.

These cuts in free handouts & the savings would go a reasonable way to boosting proper interest rates for struggling pensioners.

I too am fed up with annually having to move money to a new account with the same bank to get the bonus which only makes the amount up to what it should be at all times, what ever the top rate is at the time. One bank insisted they returned the money to me bank from the closing account and then I had o send it to them to open a new account, losing the interest during the transfer period. Quite mad!!!

Hilary says:
24 July 2015

Several years ago my interest on an ISA with Santander, from which I had withdrawn nothing dropped from £1200 to less than £100. No doubt they would claim they had notified me but I was not aware of it. As soon as I realised what was happening I switched provider.

Lorraine says:
24 July 2015

Great news! About time…disgraceful behaviour..I haven’t got much to save but knowing that I will be informed about the best rates for me has got to be a bonus. RESULT!

Steve Carter says:
24 July 2015

No correctly-run economy can have a financial sector accounting for more than four percent of GDP and not be highly vulnerable. The UK’s figure is around ten percent, hence the problems. The financial sector makes a great deal of its income from creating something from nothing. The only people that pay in the end are you, me and the vulnerable third world that cannot fight back Why haven’t the world’s No. 1 terrorists – Goldman Sachs, J. P. Morgan and the Bush dynasty etc. never been charged with destroying the world’s economies?

Good result on this. I have suffered the complexities of fixed term bonds, and the cliff-edge fall in interest rates at the end. Tracking these ISA`s is complicated enough for accountants – never mind members of the public. B.S`s are still lowering interest rates on existing accounts.

I have closed some of our family ISA accounts, and moved money into shares, Unit Trusts, and Peer-to-Peer lending schemes (which pay about 5% interest).

The best way to deal with these pitiful rates is to take your money away from B.S`s and banks altogether. That’s a message they do understand !!