Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Beware of Headline Savings Interest Rates…Over 75% Have a Sting in the Tail

Personal_Finance / Savings Accounts Aug 24, 2007 - 06:17 PM GMT

By: MoneyFacts

Personal_Finance Rachel Thrussell, Head of Savings at Moneyfacts.co.uk – the money search engine, comments: “With the aftermath of the last interest rise rate finally over, and most providers opting for the full quarter point increase, it is pleasing to see that over 90 bank and building society variable rate accounts now pay at least 5.75% (base rate). But the rate is only part of the picture when it comes to a competitive savings account. Too many of the high paying accounts come with restrictions and conditions.


The latest Moneyfacts.co.uk survey shows that a staggering 76% of the accounts paying base rate or higher, come with restrictions, conditions or introductory bonuses. The more common conditions include: Members/existing customers only accounts, only open to new monies to the institution, introductory bonuses, limited number of free withdrawals, age restrictions, withdrawal limits, loss of interest for withdrawals, and specified uses for the funds.

“With many accounts using a combination of these conditions, it’s no longer as simple as comparing the rates on instant access account, no notice or notice accounts, as in many cases they simply don’t do what they say on the tin.

“The table below shows a selection of the best paying accounts, but as you will see from the final column, the best rates often come with catches.

“But if you don’t want the hassle of remembering how many of your free withdrawals you have left, or knowing when your bonus rate expires, then the accounts below show examples of the rates found on no strings savings accounts. As you can see the rates are on average slightly lower, but they offer a very competitive return and more importantly you don’t have to jump through hoops to get it.

“But even more worryingly, too many savers are receiving a very poor rate of return, with a massive 51% of accounts paying less than inflation (RPI), and this statistic is based on the gross rate, so if we consider the net return after tax, this figure would be even more startling. To receive a net return in line with inflation, you would need to secure yourself a gross interest rate of at least 4.75%.

“The average savings rates today (based on £5K) for notice and no notice accounts are a meagre 4.279% and 4.092% respectively.

"But the hall of shame highlights some of the poorest paying accounts on the market. It’s unbelievable that some providers continue to offer accounts which pay rates of 1% or less. Any saver with money invested in any of these worst buy accounts, should dump their provider sooner rather than later. One thing is for sure, ‘treating customers fairly’ this definitely isn’t. It’s about time these accounts were phased out or rates upgraded.

“Take for example a saver with £5K to invest.

The Derbyshire account this would give a gross return of just £25. Compare this with investing in the Chelsea 30 day account at 6.40% which returns almost £300 more in a year. Rather than this extra interest lining your pockets, it’s lining the coffers of the banks and contributing toward their ever increasing bottom

“Savers should vote with their feet and switch providers if they are getting a poor deal, but they need to do so with caution. Look beyond the headline rate and check with your new provider that the account will match your needs, provides you with the access you require and offers a rate you are happy with.

“On the other hand if you are happy to accept the top paying accounts that come with restrictive conditions, then make the most of the returns on offer. But I fear only too often are savers duped into these deals by the term ‘instant access’ without realising what they are signing up to, until it’s too late.

“Savers don’t want to jump through hoops to get a decent return, they just want simplicity and consistency. By all means providers should offer a comprehensive range of savings accounts, as there will be something to match the needs of all savers, but the terms & conditions must be clear and unambiguous. Don’t refer to something as instant access when withdrawals are at a 30 day loss of

interest, or include large bonuses for short periods of time but show the saver the initial rate rather than the AER.

“Savers should be treated with respect, given all the information up front and not insulted with some of the paltry interest rates highlighted above.”

www.moneyfacts.co.uk - The Money Search Engine

Money Facts Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in