Simon Read: High-interest to no interest: why the best-buy deals stink

 

Look, what I want from my savings account is simple. I just want to know my cash is safe, is available when I need it and is earning a decent rate of interest.

You may want more. Plenty of people want to squeeze the maximum they can from their rainy day cash. They want their money to work hard for them which means they will devour the best-buy tables, and switch savings accounts the minute a better deal comes along.

That’s fine for those that can spare the time and be bothered to make the constant effort to maximise returns. But the rest of us – and I believe we’re a majority –want to find a safe home for our savings and leave our cash there until we need it.

I did that for years until relatively recently when one day I checked my annual statement to discover the interest added over the previous  12 months was negligible. In fact I think it was less than a quid on a balance approaching £1,000.

Confused? You bet I was! In fact behind my back the interest rate paid had been slashed to  0.1 per cent. The account was called Gold or Premier Savings or some such marketing garbage and had been sold to me as a market-leader.

But once my cash was safely locked away, the savings institution – it was LloydsTSB, to be honest – simply slashed the rate and left my nest egg to rot. Lloyds is far from being the only bank or building society to play the game. All of them turn good accounts into worthless ones over time purely – as far as I can tell – to avoid paying reasonable returns to customers.

In fact, over recent times things have got even worse with all of them playing the bonus game. That’s when they launch an account with a great interest rate but which, in fact, is mostly made up of a bonus which is abruptly snatched away after a set time, leaving your savings earning practically nothing.

What can you do to get a reasonable return that you don’t need to keep checking? I put the question to expert Anna Bowes, pictured, who is a director of an online site which monitors the UK’s many different accounts and bonds. She says: “To earn the best rates of interest, savers have to jump through complicated hoops; from bonuses to withdrawal restrictions to even using some current accounts as savings account in order to get a decent return.”

In short, there’s no safe, simple home. So what should we do? Check the terms and conditions, advises Anna. “It’s important to understand the rules of the account you’re applying for, otherwise you may be unable to get at your money without your rate plummeting.

“For instance, some so-called easy-access accounts only allow one or two withdrawals before the rate drops heavily. Other accounts offer short-term bonuses that guarantee the rate will fall, to as little as 0.1 per cent, at the end of the bonus term.”

You can find out the latest savings rates and deals at Anna’s website at savingschampion.co.uk.

Looking ahead, are there any signs of change? Will institutions return to offering us fair accounts? James Blower, director of savings at Shawbrook Bank hopes so.

“We believe the UK savings market needs to start treating depositors a bit more fairly,” he says.

The bank says it is backing up that view by playing fairer with savers.

“We don’t offer bonus rates or gimmicks, but just focus on simple, consistently good rates,” says  Mr Blower. “We think fair treatment for savers is common sense.”

If only others thought the same. I’ve pushed some of the mainstream savings institutions to scrap bonuses and other tricks but they say that if they do, they will lose competitive advantage to their rivals. If even one major bank or building society continues to play the bonus game, they all will.

The problem is it works. When someone seeks a home for their savings, it’s natural to pick the account which pays the highest rate. However, that’s got to change,  Mr Blower believes.

“It takes a sharp eye to read through the small print to work out which savings account is the best one for you. Why should it be so difficult to establish whether the account you are trusting with your hard-earned deposits is going to plummet without warning?”

Why indeed!

Start your day with The Independent, sign up for daily news emails
Suggested Topics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Sport
Diego Costa, Ross Barkley, Arsene Wenger, Brendan Rodgers, Alan Pardew and Christian Eriksen
footballRodgers is right to be looking over his shoulder, while something must be done about diving
News
The illusionist believes hypnotism helped him to deal with the lack of control he felt growing up
people'It’s not that people react badly to it – they really don't care'
News
i100
Life and Style
tech
Life and Style
gaming
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Argyll Scott International: Business Analyst - MGA - London Market - Insurance Broker

    £50000 - £60000 per annum + benefits: Argyll Scott International: A Business A...

    Ashdown Group: PR, Marketing & Events Executive - Southwark, London - £35,000

    £30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...

    Selby Jennings: C++ Developer – Hedge Fund – New York

    $80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

    Selby Jennings: Java Developer Enterprise Specialist –Paris,France

    €30000 - €50000 per annum, Benefits: Competitive Bonus: Selby Jennings: Java D...

    Day In a Page

    In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

    Iran is shifting from pariah to possible future policeman of the Gulf

    Robert Fisk on our crisis with Iran
    The young are the new poor: A third of young people pushed into poverty

    The young are the new poor

    Sharp increase in the number of under-25s living in poverty
    Greens on the march: ‘We could be on the edge of something very big’

    Greens on the march

    ‘We could be on the edge of something very big’
    Revealed: the case against Bill Cosby - through the stories of his accusers

    Revealed: the case against Bill Cosby

    Through the stories of his accusers
    Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

    The Meaning of Mongol

    Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible