Julian Knight: The banks want your savings. So don't ask for them back

Charging customers to take out their own cash and calling this 'instant access' is no way for account providers to build long-term relationships

Choosing the right savings account isn't just about going for the best headline rate. It's always advisable to check the small print for hidden nasties, which could take a great big bite out of any interest you earn on your money. This is the conclusion of the research firm Defaqto, which has looked at the 50 highest-paying instant access savings accounts available in the UK.

First the good news: all 50 are paying above the Bank of England base rate of 5 per cent. I can't recall such a large number of accounts paying above BoE rate at any time in the past. We have the credit crunch to thank for this state of affairs. Banks can't raise the cash they need to finance mortgages and loans on the international money markets cheaply enough, and need to pull in fresh cash from ordinary savers.

But it's no good just attracting new savers; banks need to keep them long term. Now they could just ensure that they keep paying the best rate and get their customer service spot-on. But Defaqto notes a trend among some banks to tag on stringent terms and conditions to their savings accounts. It found that 15 of the 50 accounts surveyed limited the number of withdrawals customers were allowed to make each year. Any customer exceeding this limit will be hit with a brutal loss of interest.

What I find really galling is that these accounts are allowed to masquerade in the best-buy tables under the term instant access. They are only truly instant access if you fancy paying a penalty, and for me they are as disingenuous as accounts that pay an introductory bonus which disappears after a few months.

Left up in the air

Another week, another airline goes bust. Zoom's collapse brings the total number of airlines leaving the departure gate for good this year to a staggering 28. With fuel costs having soared, more will go to the wall; we need to ensure passengers who booked seats in good faith are not left stranded abroad or without a refund.

Zoom advises passengers to claim compensation from their credit card company, referring to section 75 of the Consumer Credit Act, which makes card providers jointly liable if a purchase goes wrong. But not everyone will have paid for their flights this way, and why, in truth, should the card companies pick up the tab for a failed business model?

The airline industry as a whole should, as a matter of urgency, adopt a bonding system – as suggested by the parliamentary transport committee – so if an airline goes under, its rivals will ensure that people get their money back and are repatriated for free.



Too young to drive?

I have a confession to make, I really don't like having my photograph taken. I have big bushy eyebrows, a habit of glaring menacingly at the camera and a smile – while not as cringe-inducing as Gordon Brown's – that suggests pain, not pleasure. However, one of the few pictures I am pleased with is on my driving licence.

But now Norwich Union tells me I need to get my mugshot changed pronto as the fact that it is 10 years old means the licence is no longer valid. As a result, apparently, I am driving illegally and some insurers would probably turn down a car insurance claim if I were to make one – a big price to pay for an oversight. Photo licences were introduced in the second half of 1998, so potentially thousands of drivers could, unwittingly, be driving around illegally and as a consequence uninsured.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

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