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Issue 52 - July 2007
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Banks and building societies are masters at making their products as complicated as possible and hiding onerous terms and conditions in their small print. This week we look at the savings market and suggest that some of the savings accounts being promoted with much hype are not all they seem. So to make sure you don't end up with an account that has more strings than the Royal Philharmonic read on...
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| You know the drill, you get home from a hard day at the office, your chicken korma has got 3 minutes of whirring left in the microwave and you just want to kick back and enjoy your dinner with a nice cold beer or glass of chardonnay. Then the phone goes, it's a holiday company congratulating you on winning a free holiday;
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you are naturally wary and a little annoyed at the intrusion.We have all come to broadly accept that nothing in this life is for free and special offers are rarely that special. Yet earlier today you signed your tidy nest egg over to a bank who promised you 10% interest on your savings - You did read the small print - right?
Many banks & building societies have come to realise that a 'great' savings rate is a good way of striking up a lucrative relationship with new customers. They also make the terms & conditions so confusing or misleading that it will be difficult for you to calculate the rate at which your savings should be growing. Here are some of their most notorious tricks, designed to get you through the door and keep you there.
Conditional Products
If you fancy that 10% 'Super Saver' interest rate you've seen advertised by Abbey National but you only want a savings account then sorry, unless you are prepared to take on another account with them, such as a current account or investment product, you're out of luck.
Let's assume for a minute you're happy to take on a current account in addition to your savings account, and plan to get around that condition of sale by tucking £50 away in the current account then bad luck. They thought of that too, which is why you have to credit the account with a minimum of £1000 per month to keep receiving the interest rate of your dreams.
Withdrawals
Another ruse you may come across in your search is demonstrated remarkably well by the Britannia's 'Regular Saver' account. This account offers 'instant' access with a very attractive rate of 5.40%, wow, that's too good to be true!
Exactly! The full terms & conditions of this account state that the rate includes a 3% bonus providing there is only one withdrawal in your bonus year, added to this the rate also requires you to make 12 consecutive, equal, monthly payments to receive your 3% bonus. If you fail to comply with any of these account conditions, the rate you receive will be just 2.40%!
So had you NOT checked the terms and conditions, you may be under the impression that you can collect your 5.40% monthly and still dip in and out as you wish.
Deposits
If you are in the position to deposit a lump sum, or perhaps want to save a substantial amount each month, watch out, many savings accounts have upper and lower limits. Again, the Abbey National 'Super Saver' account has deposit limits of between £20 and £250 per month. If you should fall below your £20 per month payment, your once stunning 10% rate will fall to a rather dowdy 0.10% on the whole balance for that calendar month. However, should you deposit more than £250 in any calendar month your rate will plummet to 0.10% on the whole balance for the entire term of the savings account rate, in this case 12 months.
Short-term Interest Rates
Many of the high interest savings accounts are also for a limited period, from as little as three to twelve months, you are then automatically relegated to one of the provider's lower rates. As is the case with the new Alliance & Leicester 'Mortgage Regular Saver' account. The rate offered is a whopping 15% for a fixed term of 12 months. You are also required to make 12 fixed payments not exceeding £250, and you cannot have access to your money for the term of the rate. You must also apply for a mortgage at the same time as applying for the savings account.
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| credit cards | |
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MBNA Platinum Plus
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| banking and saving | |
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Bank of Scotland Instant Access Savings Account
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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