Scottish Daily Mail

Shock as saving rates cut by half

By Sylvia Morris

- sy.morris@dailymail.co.uk

THOUSANDS of savers are earning a pittance on cash languishin­g in more than 1,400 closed easy-access accounts.

Banks and building societies routinely launch accounts and withdraw old ones from sale. They then quietly reduce the once toppaying rates, in the hope savers don’t notice.

It means that if you haven’t checked your rate for a year or more, you may well be earning a lousy rate of between 0.3 pc and 0.1 pc.

Easy-access deals are by far the most popular type of account and home to around £750billion, or £6 out of every £10, of our savings. The other £4 is split between fixedrate bonds, notice accounts and cash Isas.

But loyal savers must not be fooled by any headline rate advertised by their provider — even if the account has the same or a similar name to their own. You could be in an old version of the same account, earning a far lower rate than that promised to new savers.

Just last week, Nationwide reduced its rates on closed easy-access accounts, such as its Flexclusiv­e Online Saver, from 0.6 pc on balances up to £10,000, to just 0.3pc — less than half the Bank of England base rate at 0.75 pc. Rates on its Limited Access Saver, Limited Access Online Saver and e-Savings Plus dropped from 0.75 pc to 0.5 pc.

Meanwhile, Britannia Select Access Saver is currently offering a rate of 1.4 pc. But this is only paid on Issue 10 of the account, on sale to new customers online, over the phone or through Co-op Bank branches.

Some older issues of the account — which limit you to making four withdrawal­s each year — pay less than half this amount. If you have Issue 8, for example, you’ll be earning just 0.6 pc, while Issues 1 to 6 pay 0.7 pc.

Virgin Money pays 1.16 pc on its Virgin Easy Access Saver Issue 32, now on sale. But those in Issues 1 to 30 have seen their rate cut to just 0.25 pc.

Or you could be in a bonus account, which pays a top rate, but only for a year. Once the extra interest disappears, you may end up earning as little as 0.2pc. With both Post Office and AA Savings — backed by Bank Of Ireland — you will end up with 0.25pc or 0.2pc after a year. But the same providers are offering new savers a much better deal. Post Office Online Saver pays 1.15pc to new account holders and AA Savings 1.11 pc.

Halifax pays just 0.2 pc on its Instant Saver and Web Saver, both now closed accounts, but once top-payers. Lloyds Bank Standard Saver also pays 0.2 pc.

Worse still are several old Halifax accounts — Extra Income Saver, Bonus Gold, Liquid Gold and Saver Reward — along with Nationwide e-Savings at 0.1pc. Savers can earn nearly 15 times more interest by switching to a better deal (see table, below).

Anna Bowes, director at savings advice site Savings Champion, says: ‘This problem is not going to go away. Banks and building societies will keep taking advantage of those sitting in closed accounts.’

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