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26/10/10
Savers are missing out on 12 billion a year due to poor interest rates

The consumer group, Which?, says savers are missing out on billions of pounds, because they leave their money in accounts which no longer pay top rates.

It said that nearly half of 1,200 savings accounts in the UK paid interest of 0.5% or less.

Which? said if all savers switched to accounts with the highest rates they could receive an extra 12bn a year.

The British Bankers' Association (BBA) said that details of savings rates were readily available.

It is possible to shop around for high interest rates, but like most special offers, they don't last forever. Say you do find that great deal - interest rates of 3%; let's call it the luxury latte deal. If you put away 1,000 a year you'll get 30 in interest, enough for a fair few of these. But even some of the best deals slash their rates after just 6 months to 0.5% - sometimes even less - and suddenly your deal looks more like a plain old cup of tea.

The report for Which claims that banks rely on people forgetting to check if, or when, rates are being cut.

Peter Vicary-Smith, chief executive of Which?, said: "Banks are depriving British savers of 12 billion a year by keeping us in the dark about the pitiful interest paid on hundreds of savings accounts.

"Whilst we pressure the banks to be more upfront about their rates, people can take action and potentially add hundreds of pounds a year to their savings by moving their money to a better account."

In order to address what Which? describes as the Great British Savings Scandal, they suggest banks need to be more transparent and are pressing banks to:

1) Publish interest rates on all statements paper and online.

2) Clearly display all savings account interest rates online e.g. no more than one prominent link away from the savings home page.

3) Provide each customer with an annual notice of savings interest rates, which should include:

  • current interest rates for all accounts offered by the provider, even those accounts closed to new customers
  • show in pounds and pence how much savers would earn in each account if they had 1,000, 5,000 or 10,000
  • a prompt for savers to check their account's rate plus what to do if they want to switch including a route such as a phone number and web page to help people switch.

    With deals constantly changing, the expert advice is to use online comparison sites, keep an eye out for new offers when you visit your local branch and make sure you read the small print.