Savers tired of vanishing bonus rates on their accounts

Business banking news review: week ending 28 Mar 2013

Unless you’re a glutton for punishment, you’re most likely tired of having to play games with your savings accounts when the bonus interest rate falls off.

It’s the time of year – right before the end of the tax year – that many banks and building societies roll out their headline cash ISA savings rates, but the problem right now is that just about every banking provider has put forward rather lacklustre offerings so far. On top of that, even the savings accounts with the ‘best’ often carry bonus rates that will up and disappear after their 12 month introductory period, leaving savers both proverbially and quite literally holding the bag at the end of this time with a savings product that hovers around the current 0.5 per cent base rat as set by the Bank of England quite literally years ago.

With the cost of living so high, most savings accounts are rather dull when it comes to actually making your money grow, especially when you take just basic tax into account. This has made cash ISAs relatively popular due to their tax-free nature, but current the best buy instant access ISA – a 2.50 per cent offering from Chelsea Building Society – will see you only earning 0.5 per cent after just one short year, which means you have go to mad trying to find a new ISA that accepts transfers in, and this can take a serious amount of turning over stones until you finally find a suitable replacement!

However, there could be some good news on the horizon, as ministers have put forward plans for a new range of savings accounts with easy to understand rates of return that are free of any sort of games when it comes to dealing with a provider tacking on a misleading bonus rate. There’ll be none of that on these new accounts, which will all feature a kitemark so prospective savers can see at a glance that the account they’re considering is one of these new no-nonsense offerings that lack any sort of introductory or bonus rate – and that will pay new and existing savers the same amount in interest, as well!

With some £1 trillion invested in interest-bearing deposit accounts in the UK according to the Office for National Statistics, this represents shedloads of money – our money – that’s in serious need of some careful stewardship. Despite the massive £1 trillion figure, around 4 out of every £10 is languishing in an account that offers such low interest – often as a result of a bonus rate running its course – that something simply must be done to safeguard our country’s savings pots, and these new ‘does what it says on the tin’ savings products are just what we need, as far as I’m concerned!

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