Savers who miss out on better rates of interest

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The Independent Online
SAVERS need to be vigilant about the rates of interest they are earning on their deposits.

Thousands still have money in outdated accounts that have been superseded by ones paying better rates of interest. Under pressure from their ombudsmen, banks and building societies are doing more to publicise new, higher-paying, accounts, but some people are still missing out.

Lucy Cole, of Maidstone, Kent, is furious that Abbey National recently accepted nearly pounds 40,000 into an account that was theoretically closed to new investors in 1988. Deposits on this account are now earning a paltry 0.5 per cent, just 0.375 per cent after tax is deducted.

Mrs Cole kept just a few hundred pounds in the Saver account until 22 July this year, when she deposited pounds 6,000. Shortly afterwards she put in pounds 33,000, bringing the balance up to just under pounds 40,000.

She did not discover what the interest rate was until this week.

The bank apologised and offered to switch the money into an Instant Saver account, where it will earn 5.1 per cent gross, (3.825 net), and backdate interest. A spokeswoman said the bank had taken steps to publicise its interest rates - by sending leaflets with annual statements, for example - and staff were trained to alert customers to better rates. Mrs Cole must have slipped through the net.

Mrs Cole does not recall receiving information from the bank about new accounts with higher rates, but as she points out: 'You receive so much bumph that it would be easy to miss the information.'

She has had a much better experience with Nationwide Building Society where, she says, the staff have pointed her to higher- paying accounts. This is ironic since Nationwide suffered fierce criticism and complaints to the building societies ombudsman over its treatment of savers stranded in old accounts.

Nationwide may have got the message across to Mrs Cole, but appears not to be doing so for all savers. Another Independent reader complained this week that his parents, both in their eighties, had money earning a pittance with this society and with Cheltenham & Gloucester.

These elderly people, relying on their savings for income, had pounds 10,000 in C&G's Premier monthly income account earning 3.57 per cent gross (2.68 net) when it could be earning 6.08 (4.56 net) in the monthly income version of the London Share account or 6.3 per cent (4.725 net) in the Instant Seven account.

A spokeswoman for the society said branch staff were briefed to tell savers if there were better rates available. People with money in the Premier account could transfer it without penalty.

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