Almost half a million savers are running the risk of being locked in to savings accounts with below par interest rates in the coming few weeks, according to industry experts.
With 535,000 fixed rate bonds maturing this coming month, October is the peak season for the nation’s savings products. However, if savers do not keep an eye out on what their personal or business bank account provider is planning, their cash could end up out of reach in yet another long-term bond.
When these fixed bonds reach the final weeks of their terms, some banking service providers will automatically deposit your cash into easy access savers with truly abysmal interest rates that can be as paltry as 0.1 per cent. While these rates are truly laughable, savers can at least gain access to their cash with relatively little hassle, yet an emerging trend within the banking sector is to instead deposit savers’ cash in an additional fixed rate bond with a term identical to the original savings product, and frequently at lower rates offered by competing banks.
Any attempt to withdraw cash from these accounts will routinely see savers giving up their right to as much as four months’ worth of accrued interest, a practice that the banking industry benefits from either way, says Save our Savers campaigning group spokesman, Jason Riddle. Mr Riddle said that banks and building societies are raking in the profit from the apathy and inertia of savers across the country, calling the practice of locking savers into low-rate accounts with no exit simply because a saver did not react quickly enough as ‘underhanded.’