Emotional ties are strangling our savings
Sunday 08 May 2005
Emotional attachment to money is a powerful force. From the 1980s "loadsamoney" mentality that made it socially acceptable to spend one's life in pursuit of ever greater wealth, to small investors who hang on to shares bequeathed in a legacy no matter how poorly they perform, it's easy to develop a blinkered attitude to your finances.
Emotional attachment to money is a powerful force.
From the 1980s "loadsamoney" mentality that made it socially acceptable to spend one's life in pursuit of ever greater wealth, to small investors who hang on to shares bequeathed in a legacy no matter how poorly they perform, it's easy to develop a blinkered attitude to your finances.
And there's one particular misplaced loyalty that is costing millions of us dear: a sentimental attachment to a bank or building society.
Recent research from consumer body Which? found that family tradition, force of habit and ignorance of better deals keep many people earning miserly interest on their savings with the same old account provider.
In many cases, the rates paid were languishing way below the Bank of England base rate and below inflation. It was even the case usually that much higher rates were available elsewhere within the same bank or building society. Often, these poor-paying accounts have closed, but many savers continue to leave their money lying there.
This is unacceptable but, unfortunately, it's legal. Your bank may be obliged to write to you once a year to show you what else is available, but it's up to you to do something about it.
The financial analyst Money-facts shows just how derisory some of the rates on offer can be - even for considerable sums of money.
As well as the long-standing rogue accounts such as Halifax's Liquid Gold (paying 0.95 per cent on any savings) and Abbey's Investor 60 (1.79 per cent up to £5,000), there are more surprising guilty parties.
Nationwide building society pays just 1.55 per cent on all savings up to £10,000 in its instant access CashBuilder account. Simply move them across to its e-Savings account and you'll more than treble the interest, earning 5 per cent.
Northern Rock offers a measly 0.45 per cent on its Instant Access saver account. A quick phone call and the money could be earning 5.41 per cent in its Tracker Online account (but note, after six months, the rate falls back to 4.7 per cent).
Of course, you'll need internet access for these last two high-paying accounts, but even if you don't want to go online, both lenders can still offer you improved rates. For example, the CashBuilder's nearest rival account - the Bonus 60 - pays 2.65 per cent up to £10,000.
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