/ Money

Save your cash from the zombie accounts

Zombie hand coming out the ground

The clocks are going back and Halloween is approaching. We might be embracing autumn but the last place you want to find a zombie is in your savings account. Do you need a wake-up call to the state of your savings?

When’s the last time you checked the rate on your savings account or Isa? And has your hard earned cash been festering away in it for years? If so, it might be time to check.

If you’re anything like me, it’s easy to put money into an account and not give it too much more thought (apart from feeling happy about finally managing to set up an Isa and – shock horror – actually put something in it!).

Tiny rates of interest

I was very surprised to find out that doing so could leave savers like me and you getting as little as 50p in annual interest on a hard earned £1,000 savings pot.

We looked at all 1,952 instant access and notice savings accounts and cash Isas in the market and found 1,562 of them are closed accounts (also known as a ‘zombie’ account). Many of these scary-sounding zombie accounts offer teensy rates of interest that will never increase. This can happen when the luring initial bonus rate advertised by the bank expires.

With interest on savings accounts falling rapidly over the past few years, it’s more difficult than ever to get a good return. If your money is languishing in a ‘zombie’ account act now – we found nearly 40% of these accounts pay 0.5% or less in interest and nearly one in five pay 0.1% or less. The worst pay 0.05% – giving you that pitiful 50p a year for an £1,000 pot.

Introductory rates – long gone

We trust banks with our money, so is it too much to ask for your banks to alert you to the fact that the rate you signed up for has long gone?

In an ideal world we’d all be keeping a close eye on our rates but much of the onus should definitely be on the providers. There should also be better notifications when the rates are going to go down, or your bonus is no longer available.

How long have you left money lurking in a poor interest account? And how do you keep on top of ensuring you’re getting a good deal on the money you put away.


I first became aware of this game many years ago, when I found that Abbey National had dropped the interest on an account from something respectable to 0.1% without telling me.

It is not good that companies are allowed to entice us with high interest rates and then phase them out, at the same time offering a new account to draw in more customers. I acknowledge that customers are told about interest rate changes these days, but I think the companies should be required to automatically transfer to money to achieve best interest unless instructed otherwise by the customer.

I’m not going to admit how long I have had money in ‘zombie accounts’, but I found one paying 0.05% early this year.

A couple of years ago I wanted to make a major purchase and decided to take some money out of a savings account without giving the requisite notice [the right amount of money was reposing there, smiling at me but not doing much else to benefit me]. When I presented myself at the building society counter and requested my withdrawal I was cautioned about the appalling consequences of losing one month’s interest on the sum invested. So I asked just how much I would be forfeiting if I proceeded with this heinous scheme. Err . . . a quick tap on the keyboard . . . Umm . . . “26p!!” So for less than the price of a stamp I could have my money out there and then. And they wonder why customers are so fed up.

Wavechange mentions “high interest rates”. In a world where 0.5% is the norm, 1% is 100% higher and therefore counts as a a “high interest rate” and 2% is positively stratospheric! I suppose I have enjoyed too many years when interest rates comfortably exceeded inflation rates however you measured them.

Good point about ‘high interest rates’, John. I was referring to problems I had some years ago, when decent interest was available. Now that I am retired and have more time and need to keep track of my savings, there is less opportunity to save money without risk.

I entered a competition when I was about 17 and won £3 in my very own Lloyd’s or TSB account, I forget which. That was some 30+ years ago, and of course I can’t find any paperwork for it. But no worries there’s a free service that will track down your zombie accounts, except they couldn’t find details of it 🙁 It was a national competition, so I was very surprised they couldn’t find any details of the account 🙁

For some of us ‘oldies’ the drop in savings rates has had the equivalent effect on our disposable incomes as the pay freeze has had on those in work. We certainly are in ‘it’ together- and ‘it’ doesn’t smell very nice.
Anything over two percent seems to come with caveats. One has to have an accompanying account to qualify and there are limits as to what can be invested making generous interest rates a very limited advantage. Other accounts used to fix for better interest, but these seem to be no better than the rest. ISA’s too, were supposed to offer a tax free home that would beat inflation – not any more. There are a few banks that I wouldn’t go near, what ever the rate, simply because the British end belongs to somewhere abroad that could fold. I don’t want the hassle of claiming anything back under any guarantee – if there happens to be one. I admit to being too naïve (and cautious) to dabble in stocks and shares. I could get all bitter and twisted, but life is too busy so I’ll just tighten the belt and get on with it.

The Skipton Building Society are especially good at reducing interest rates without any warning. They used to send letters when rates changed but not anymore. No emails, nothing.

We left our Santander ISAs to collect interest. That was the whole point of them. We were aware that interest rates were dropping but the hassle of finding and choosing and arranging transfer to other accounts meant it wasn’t something we got round to. Then we suddenly received an ultimatum that unless we did something our accounts would be made dormant. We were very heavily involved in family matters at the time and could do no more than present ourselves with passports and statements and letters and jump up and down assuring them that there was no reason to presume that we were no longer at our address. We were just otherwise engaged at present and did not want our accounts made dormant.

We were told to put some money in. “But they’re ISAs and we can’t put new money into more than one cash ISA in a tax year” we replied. That was what they wanted us to do and to sign that we wouldn’t put any money anywhere else that year and hadn’t put any more anywhere else.
We didn’t. We phoned head office to complain. We got a ridiculous letter saying that we hadn’t had our National Insurance numbers. Completely ridiculous because every time you go into the bank and want to do something they say “Don’t worry, as you’ve got an ISA we already have your National Insurance number”.

It is still unresolved in the pending tray. What was someone thinking… and why on earth can’t they train their staff if they are going to send out letters to be able to respond in a way that the public can have confidence in?