Savings Account Flaws Exposed
Writes Dan Drage dan.drage@consumerchoices.co.uk
Independent financial data collection house Defaqto has taken a long look at savings accounts, resulting in the discovery of several hidden clauses.
Analysis by Defaqto of the 50 instant/easy access accounts paying the highest interest rates has revealed:
- 15 of them limit the number of withdrawals permitted and/or impose penalties on some withdrawals
- 18 have introductory bonuses which quickly expire
- 11 have a minimum withdrawal restriction of £100 or higher
Typical restrictions unearthed include loss of bonuses if accounts are closed early, loss of interest if withdrawals are made and restricted yearly withdrawal limits.
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"There's been quite a vogue amongst banks and building societies to launch instant access savings accounts which restrict the number of withdrawals permissible"
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Of the 50 accounts only 19 have neither withdrawal restrictions nor a short-lived introductory bonus. Additionally, 9 of the 50 accounts are restricted to older adults aged 50+, 60+ or 65+.
David Black, Principal Consultant of Banking at Defaqto, had the following to say:
“It's encouraging to see so many accounts offering attractive headline rates but savers need to keep their wits about them to avoid choosing an unsuitable account”
He continues:
“There's been quite a vogue amongst banks and building societies to launch instant/easy access savings accounts which restrict the number of withdrawals permissible, or worse still impose a penalty on all withdrawals. These accounts may suit some but will also result in many savers not achieving the advertised rate if they fall foul of the withdrawal restrictions.”
Chris Eagle, Commercial Manager at CreditChoices.co.uk, has the inside track on savings accounts:
“Accounts from Kaupthing Edge, Birmingham Midshires (www.askbm.co.uk) and Bradford & Bingley pay the highest gross AER without withdrawal conditions or age restrictions. The Abbey (www.abbey.com) eSaver account matches the aforementioned, but with a reduced interest rate in any month a withdrawal is made.”
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