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Simpler savings are just the first step

Saving money in jam jars

‘Simplicity is the ultimate sophistication’, wrote Leonardo da Vinci. The growing trend for more straightforward savings is encouraging, but there’s still plenty of room for improvement in the market.

It may have taken savings providers a while to come round to the idea, but ‘simplicity’ seems to be their new buzzword. Nationwide is the latest provider to scrap several existing accounts and replace them with a smaller selection of new products in a bid to simplify its savings range.

The building society follows in the footsteps of other big names, including Royal Bank of Scotland (RBS) and NatWest, which last year reduced the number of cash Isas on offer to one per brand, and HSBC, whose new Loyalty Isa has recently become its only on-sale cash Isa.

Tempted by teaser rates

As part of their efforts to make savings more straightforward, these providers have also removed introductory bonuses, which give short-term rate boosts to new customers before dropping off.

While these ‘teaser’ rates have their merits, it’s good to see existing savers being put first by getting rid of the special offers only new customers enjoy.

There’s further to go, though. Providers still need to confront the issue of ‘superseded’ accounts – which once paid a great rate but, in many cases, now pay a pittance – by proactively notifying savers that their account is closed to new customers, telling them what the interest rate is and whether there are better-paying accounts available.

While some providers have started to cut away these accounts, their prevalence means that the current simplification is only the first in many of the steps needed to heal the savings market.

Comments
Member

“Nationwide is the latest provider to scrap several existing accounts and replace them with a smaller selection of new products in a bid to simplify its savings range.” So from reading further can I assume that they won’t be “upgrading” existing accounts to the new ones, so its same old same old from the rip off merchants. And assume that this ploy is just another marketing gimmick to attract people, rather than be of any real benefit to the end user.

Member

If a savings account becomes obsolete the money should be transferred to the nearest equivalent account rather than paying paltry interest on the balance. I see this as a higher priority than simplifying accounts.

Member
micath says:
4 April 2014

I would like to promote the idea that finance houses that deal in ISA’s must offer the the same interest rates on their ISA’s as on the best of their other savings accounts.
Surely this was the intention when they were introduced, – that the saver would get the benefit of “Tax free” and not the institution.

Member

That’s a very good point micath. We seem to have lost sight of the original benefits of TESSA’s that later evolved into ISA’s. Nowadays there seems to be hardly any advantage in electing to take out an ISA after allowing for the other terms and conditions [especially inaccessibility].