Simon Read: Are we seeing the start of financial firms playing fair?

 

I'm so used to having a go at banks, insurers and other finance firms in this column it feels refreshing this week to be able to dispense a little praise.

It's faint praise, however, as the two companies concerned have only made a small improvement. But I'm hoping that their moves are just the start of a journey towards fairer savings and loans for all.

Regular readers will know of my anger over tricks used to persuade us to take out deals that offer attractive headline rates, but poor long-term value. With savings accounts it's high teaser rates that quickly shrink to paltry returns. With credit cards I'm concerned about long-term, 0 per cent interest-rate deals that have virtually hidden whopping great transfer fees.

For the latter, Nationwide's new, 26-month, 0 per cent credit-card deal comes with a transfer fee of 0.75 per cent. That's a significant improvement on standard fees which range up to 3 per cent, meaning anyone transferring a £3,000 balance is hit with an outrageous £90 charge.

That's unfair. Lenders attract us in with 0 per cent, and then clobber us with a high charge. The total costs should be on display, not just the attractive bit.

Nationwide's offering will make it around £67 cheaper than many balance transfer cards and is a significant step in the right direction.

However, the only fair deal, I believe, would be for there to be a set transfer fee of, say, a tenner. The chances of finance firms agreeing to such a simple approach? Slim!

The second move this week is that HSBC has stopped offering introductory bonuses on savings accounts. I'm pleased. Teaser rates have tricked millions into taking out rubbish savings accounts. They start out with market-leading rates but after a year it collapses to 0.1 per cent, leaving our cash languishing in a miserable home.

Savings accounts should not be allowed to rip us off. Most of us want a safe home for our savings, not one that ends up paying an insultingly low interest rate.

Those who are happy to shop around every year for a new deal disagree with my call for an end to teaser rates as they point out anyone can get the best deals. But we shouldn't be forced to have to chase decent returns.

Back to HSBC. It has launched a decent individual savings account with no introductory rates, but with a proviso. In order to get the highest rate in future you must deposit more cash each year. If you don't, the interest paid will slump to 0.5 per cent.

That's not good enough for those of us who want a home for our savings that we can trust to be paying a decent rate.

Hopefully rivals will go one step further.

s.read@independent.co.uk

Twitter: @simonnread

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