Simon Read: Savers - beware rip-off rates
Saturday 18 September 2010
How many savers have cash in low-paying accounts? I suspect it's millions. Banks and building societies have become notorious for slyly cutting rates on once high-paying accounts, leaving loyal customers getting paltry returns.
The latest victim is Independent reader Don Creasey of Maidstone, Kent. He's had an ISA saver account with the once-mighty Halifax for the past 10 years, and has been happy with the returns he's been getting. Indeed, last time he visited a branch to update his savings book in September last year, the interest paid over the previous five years averaged out at around 3.2 per cent. Not the best available rate, but perfectly satisfactory.
This month Don is moving house, so popped to his local branch to close the account because he needed the cash in it. He got a big shock. "The interest I was paid for the past year worked out at around 0.15 per cent," he told me. Even in today's low-rate environment, that's a massive drop in returns to an almost insulting rate. In fact, Don's interest was cut from £200 a year to just £8.
The average amount paid out right now on deposit accounts is just 0.77 per cent, according to the rates analysts Moneyfacts. And Don, along with millions of other ordinary savers like him, could be forgiven for believing that a popular account offered by a major high-street institution would at least offer an average return on cash.
For the Halifax to cut the rate to less than a fifth of average returns is staggeringly poor. When Don queried the pathetic returns he was told that book-based accounts always attract a lower rate of interest and that customers were warned in advance of this.
Don's response? "I never received any warning of such a drastic change in rates and was not warned of this when I visited the branch in September 2009."
I believe that Don didn't see any such warning from the Halifax. The bank – partly owned by all of us – could probably produce evidence to show that it did inform Don of the slashing of rates, but no doubt in the smallest of print at the end of the most tedious letter.
Don feels let down by the Halifax, and he has every right to be. He wants me to warn readers of Halifax's shabby actions as others could be losing out far more than he has.
I'm happy to pass on his warning, but not just to Halifax customers. Anyone with savings in any bank or building society should check the rate they're getting now.
Two years ago, before the Government partly nationalised many high-street banks in October 2008, the average savings rate was 3.6 per cent. Rates fell to their current paltry level in March 2009, and have hovered around the 0.75 per cent mark ever since.
There are better deals around, but they only seem to be available to new customers, while the rates on existing accounts are quietly reduced to practically nothing. It's the most shabby of service from banks and building societies, but they only get away with it because of savers' lethargy. Check now what rate you're getting on your account and if it's less than 2 per cent, it's time to switch to a better deal.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 1 Salisbury ranked seventh-best city in the world to visit in Lonely Planet’s Best in Travel 2015
- 2 Disney announces new female-led film Moana
- 3 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 4 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 5 Russell Brand threatened with arrest after filming outside Fox News headquarters
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
Worst Airports of 2014: Poll names Islamabad airport in Pakistan worst in the world
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village