All that glitters.....!
Misleading account names branded as ‘gold’, ‘premium’ and ‘royalty’ are tricking savers into deals paying rather less glittering rates of less than 1 per cent.
Marketing waffle is blinding customers into taking out savings accounts that offer as little as £8 on each £10,000 saved over a year.
The returns are derisory in comparison to the £256 a year available on £10,000 saved in a top savings account paying 2.56 per cent after tax (3.2 per cent before) without a fancy name.
‘These accounts should come with a “buyer beware” label,’ warns Sue Hannums of savings rate alert website Savings Champion. It’s shocking that providers can get away with selling accounts that seem to be one thing, but on closer inspection offer little more than you might earn on your current account.’
Most banks claim these accounts are old deals which are no longer advertised. Instead, the accounts are being left open as booby traps to catch out unwitting savers. Loyal customers are often the target.
For example, the RBS Royalties Saver Account is available only to Royalties current account customers who pay between £12.95 and £24 a month. But the account — described as ‘special’ by RBS — pays just 0.32 per cent (0.4 per cent) on balances below £25,000. An RBS spokesman says the bank’s IT meltdown delayed the withdrawal of these accounts.
Elsewhere, Coventry Building Society offers customers of five years or more a Privilege Saver account. Its website calls this ‘an exclusive savings account with a special rate for our longer-term members’. But these savers are paid just 0.96 per cent (1.2 per cent) a year. To add to the insult, Coventry pays 2.24 per cent (2.8 per cent) on its Telephone Saver account, which is open to all. A Coventry spokesman says: ‘We offer fair rates to all members and unlike some providers we do not cut rates to 0.05 per cent.’
At Leeds Building Society, its spiel for the Premium Access account says: ‘Good news — you don’t have to tie up your money for a long period of time to enjoy a great rate of interest.’ Yet the account pays 0.6 per cent (0.75 per cent), a fraction above the 0.5 per cent Bank of England base rate.
Dunfermline BS and First Direct take the trick to the extreme. Dunfermline pays just 0.08 per cent on its Gold Account, while First Direct pays just 0.04 per cent on its Bonus Savings account.
The supposed ‘bonus’ on First Direct’s account is an extra 0.04 per cent a year. And to get this you must make no withdrawals. A First Direct spokesman says: ‘The Bonus Saver is not actively promoted. If we did choose to promote it in future we would look to improve the rate.’
The danger list of cheekily named accounts includes Nationwide’s Champion Saver. Britain’s biggest building society makes a fuss about the account’s ‘unique’ feature of providing the average rate of the ‘five highest’ branch rates from eight High Street banks. But Champion Saver return is currently just 1.42 per cent (1.77 per cent) — far below its less glamorously named MySave Online Plus, which pays 2.45 per cent (3.06 per cent). A Nationwide spokesman says: ‘The account is aimed at savers who don’t want to keep moving their money to chase bestbuy rates.’
If you check out our blog of 02/08/2012, you will see that this is why we are offering the BM Telephone Saver account, to give a good rate of interest to those clients who don’t want to be bothered with moving their money every year, just to avoid losing out when their ‘bestbuy’ disappears.