It's No Surprise - The Banks Are Gorging Their Clients Again!
September 2005
When the Bank of England cut interest rates last month by 0.25% there were only two guarantees, one the sun would continue to rise in the east and two, many of the banks would use the cut as an excuse to boost their profit margins. They'd do this by cutting rates on many of their savings banks by far more than 0.25%.
The Worst Offenders
- Lloyds TSBs Premier Savings gets cut by 0.6% to 3.3%, the Regular savings account has been cut from 0.9% to 0.45% which means clients are losing money because the interest doesn't even cover the cost of inflation
- Most of the Halifax rates have been cut by 0.4%, same with the Cheltenham & Gloucester
- Derbyshire cuts by up to 0.6%
- Portman Building Society by 0.45% of some accounts
- And these are just a few of the banks/building societies the list actually goes on and on
Well Done Nationwide and Alliance & Leicester
The Nationwide always deserves special praise these days because they always seem to put their clients first. In our opinion they've got 2 great products;
- Their debit card has no charges for overseas usage and its Credit Card has a transaction fee of 1.5% which is around the lowest on the market today. Also there is NO foreign currency loading fee - Read this article for more info
- Their Online E-Savings account pays 4.75% pa (guaranteed not to fall below base-rates till Sep 2006) but more importantly has been a steady payer over the last few years, this means they don't play the tried and trusted marketing trick of announcing a blockbuster deal to attract savers only to drop it considerably 6-12 months later on the hope that most won't be bothered to move their money out
The Alliance & Leicester should also get commended by putting the ball squarely at their clients feet. It sends out a letter to its savers highlighting better-paying accounts that it offers to which they can move their money. This contrasts to almost every other bank who just hope people won't notice that they can get better rates with different products.
Apathy, Apathy, Apathy
Yes APATHY is the banks best friend and their clients worst enemy because the financial institutions know full well that most customers either won't realise that they're being stuffed up, or can't be bothered to do anything about it. But it's actually far easier to do something about it than most people realise, perhaps no more than 10-30 minutes to open a new account and transfer savings from one bank account to a new one. And this 'ease' is magnified when you're dealing with online savings accounts.
So Where To Put Your Money?
The following instant access accounts all offer excellent rates but be aware the Northern Rock pays an introductory bonus which gets cut after 6 months.
- First Direct is paying 5.0% for an instant savings account (instant access although NO interest is paid in any month that a withdrawal is made)
- Cahoot pays 4.85% and the account is run online
- Northern Rock's Tracker Online account pays 5.01% which includes a 0.71% bonus for 6 months. The rate is also guaranteed to be no more than 0.50% below base rates until further notice (note, that 'until further notice' pretty much gives them carte blanche to change the rules as they go along)
- The Nationwide E-Savings account offers a good 4.75% and is guaranteed to beat or match base rates until Sep 30 2005
- ING Direct pays a steady 4.75% and has been a steady rate for the last few years (it has just moved lower though from 5.0% but at least only by the recent rate cut amount of 0.25%)
Summary
If you want the best interest rate you've got to do a bit of work in hunting it down and filling out some forms, it cannot be done any other way. Don't be financial cannon-fodder for a banks profitability, learn to hire and fire them at will. If the interest rate on account is good then keep the bank on, if not then take your business elsewhere.
It's a sad state of affairs when rates seem to chance all the time but if that's the game the financial institutions are playing then there's little point in complaining. We the clients can do little about it apart of course from moving our money.
See Also
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