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Banks should ‘play fair’ by savers
(24-08-07) - Banks should be forced to inform savers before introductory offers end according to Nationwide, the UK’s biggest building society.
Customers often leave their cash in savings accounts long after attractive headline rates have dropped and they are no longer earning a competitive rate.
Nationwide said that while customers are lured in by these interest rates - typically one per cent more than the ongoing rate - these introductory offers usually only last between six months and a year, after which time savers often forget to move their cash, or don’t realise that the rate has fallen.
Nationwide said it would like to see the Banking Code incorporate rules that “make it compulsory for subscribing banks to inform consumers about the end of such deals”.
Matthew Carter, Nationwide’s savings director, said: “Introductory deals offering high headline rates for a limited period of time are now commonplace within the savings market. On the face of it, these rates may look very attractive to savers looking for a good return on their money but beneath the surface they are often little more than a smokescreen hiding an account paying a lower rate of interest.”
Calling for increased transparency, he added: “A few weeks prior to an introductory deal coming to an end, savers should be told by their provider when they can expect to see a change in their interest rate, as well as details of the new rate they will receive going forward.”
Chris Eagle, CreditChoices.co.uk commercial manager, advised customers to look beyond the headline rates. “If you don’t think you’ll remember to switch your account when your introductory offer ends, make sure you sign up to an account where the ongoing interest rate is competitive too.
“Customers also need to look into any clauses - such as the number of withdrawals they can make - that are attached to make savings accounts. These types of conditions can leave savers with a far lower rate of interest than they were expecting,” he added.
