Savers fall victim to curse of the zombie accounts

 

Millions of savers have fallen victim to "zombie" accounts, which pay paltry interest rates, sucking the life out of our nest-eggs.

Shockingly, four out of five savings products are reckoned to be zombie accounts, so called because of their lifeless returns and the fact that they are shut to new customers.

Returns on the accounts are buried as rates fall to as low as 0.1 per cent.

That would give someone who has put £1,000 in one of these zombie accounts interest of only £1 a year.

Why are there so many people in zombie accounts? First, it is because most financial firms have launched savings deals with attractive upfront offers – such as a bonus for the first year – which then disappears.

Then once we have been lured in, the savings institution lets the rate slip away to nothing. The process is then worsened by people not checking their returns.

Research by peer-to-peer lender RateSetter found that more than half of us have no idea what interest rate our savings account pays.

Rhydian Lewis of RateSetter said: "Zombie accounts are doing savers a real injustice."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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