If You Don’t Look After Your Savings Interest Rates Then Who Will?
There is a common trend in the banks at the moment which has to do with savings accounts and savings interest rates. If you keep your savings with the same bank in the same account for a number of years, you would expect your bank to look after you. But they do not and actually take advantage of this.
The banks release a savings account. They advertise it, use it to attract new customers or convince existing customers to transfer their savings to them. The customers, being quite happy with the rates and the terms, forget about their savings interest rates knowing that they have the return that they expected.
After about six months to a year the bank needs a new surge of fresh customers and develops a new savings account. They release this new account to the market. The terms will be a little different from the last. The interest rates probably differ from the old account. And new customers are drawn into the bank.
Well at first the savings interest rates stay much the same. But gradually over the next year or so they reduce the rates so that in the end the rates offered are much the same as being offered on a current account. Near to 0% in most cases. And unless you make steps to review your savings interest rates with the bank, they will let your interest decrease and will not tell you about it.
My practice as a banker is to alert my customers to their dwindled savings interest. I let them know that their old savings account is not giving them the interest rate they could be getting. I then help them upgrade their account to one of the more recent savings plans. This way we can get them back to earning interest on their money.
I can tell you though, that not all of my collegues do the same, nor are they encouraged to do so by their superiors. Upon the release of a recent new Cash ISA savings account, we were actually instructed not to upgrade customers from the old Cash ISA accounts, to the new one unless the customer actually asked us.
The reason for this is clear. The bank takes advantage of their position of holding your money. They take your money which they make a profit on anyway. Then they pay you less and less interest over time so that they actually make more and more profit on. How is that for your continued loyalty!
The answer is clear, review your savings interest rate and the terms of your savings account annually. Get the latest information on the newest savings account releases. Look at what their competition is offering. Then go to your banker and negotiate a better deal for yourself, or go to the competition. Your goal is to get the best returns on your money.
Martin has had over 6 years experience in helping customers with regards to savings interest rates. He writes more about this at http:savings-interest-rates.org.