Switch accounts all you like – inflation is still too high

Business banking news review: week ending 27 June 2013

I’ve got good news and bad news for you: there’s new guidelines for switching bank accounts, but inflation is so high good luck finding a high interest rate!

There’s an old curse that goes ‘may you live in interesting times.’ Well, I think it’s pretty interesting right now that we’ve got a new system announced this week that will allow you to switch current accounts in a maximum of seven working days. The system is scheduled to launch this September, but this week marks the publication of the new Current Account Switch Guarantee and its accompanying Trustmark – and the organisation behind the new £750 million scheme, the Payments Council, wants to make sure that everyone knows that you can rely upon any financial institution that is a part of the system.

Honestly the banking system needs this, what with the current maximum transfer time standing at 30 days right now. Even with such ample time to get your money transferred, banks and building societies are known for dragging their feet sometimes and you hear horror stories all the time about long delays in switching current accounts and customers losing out on months of interest that otherwise would have accrued, so it’s good that now there’s no reason the transfer can’t take less than seven working days.

Of course it truly doesn’t matter what kind of transfer you can manage or how swiftly you can get it done, thanks to the announcement this week that the cost of living went up once again. The consumer price index crawled up to 2.7 per cent this past month it was revealed, an increase of 0.3 percentage points from April’s figure of 2.4 per cent.

The retail prices index shot up even further, if you’re keeping score. Now it’s 3.1 per cent as opposed to April’s 2.9 per cent; the increase was slightly less when compared to the CPI but the RPI tends to run a bit higher anyway.

No matter the figures they’re just too high if you ask me. The likelihood of finding a savings account that meets or beats inflation is more or less nil at this point, though it’s been getting increasingly rare that any bank or building society is offering a ‘headline’ rate anyway.

It’s frustrating because even if inflation wasn’t so damned high, banks that usually have to drive customer deposits by providing high interest rate savings accounts in order to build working capital for their lending practices no longer need to do so, thanks to government programmes such as the Funding for Lending scheme. FLS has thrown a spanner in the works for savers in that banks now can get cut-rate lending directly from the Treasury and pay much less for the privilege than they would provide interest on a consumer savings account.

So the nation’s savers get thrown under the bus yet once again. Big surprise, eh?

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