Nationwide Demands Savings Rate Warning

Posted 2008-01-12

Nationwide Building Society is demanding people are warned when introductory savings rates expire and accounts fall to low rates.

Many banks and building societies offer high initial rates of interest on savings, running for about a year, before they drop way below the base rate set by the Bank of England.

Nationwide is now calling on all savings providers to tell customers when their accounts’ rates will dip, and is also encouraging them to notify customers of other deals available.

The building society claims its rivals are taking advantage of consumer apathy, meaning people fail to properly watch the return they get on savings.

Matthew Carter, director for savings at Nationwide, said: “The savings market is highly competitive and some providers seem more interested in boosting profit and achieving best buy status than actually offering long-term good value.

“Consumers are told when their mortgage deals are due to change and it shouldn’t be any different for savers. With introductory deals becoming more common, we’re concerned it is becoming even harder for savers to make the best decision.”

Lisa Taylor, of personal finance firm Moneyfacts.co.uk, advised savers to think about accounts with steady rates of interest, rather than jumping between promotional deals.

She said: “Often a simple no-strings account offers an equally good return, without the need to jump through hoops or navigate a maze of complex terms and conditions.

“With such a fast-changing market, unless you are prepared to move your savings on a very regular basis, a consistently performing account will offer a good return, without the time and effort of constantly searching the market.”

Following December’s interest rate cut, savers have seen rates reduced – but by more than the 0.25 percentage points knocked off the base rate.

Ms Taylor added: “Some savers have seen their rates axed by more than double the base rate cut. With many of the accounts already offering uncompetitive rates, the proportion of the rate shaved off is much higher.”

Lenders cutting savings rates include The Halifax, Alliance & Leicester, Abbey, HSBC, Halifax, Lloyds TSB, NatWest, and the Royal Bank of Scotland.

Ms Taylor also said: “Too many savers are keeping their hard earned savings in accounts which will in the long term see their savings fall in value. It’s just another example of when loyalty does not pay.”

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