Savings Strategies

By Martin D Bryant 

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.

Then after 6 months to a year the bank get bored of that savings account and decide on the next big marketing push and release another type of savings account. The terms maybe a little different. The savings interest rates is usually different. And the same thing happens again, attracting new customers etc.

But what happens to the old savings account?

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.

It has been my experience that working in the bank that if I see a customer has an old savings account, where the rate has dwindled away, that I make a point of telling them. At worst I will make sure that they are upgraded to the most recent form of savings account that I can to provide them with the most interest.

I can tell you though, that not all of my colleagues 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!

My advice is to review your savings interest rates with your bank every 12 months. Before you go into a conversation with them, make sure you know exactly what rates they would offer if you are a new customer. Then also find out what the nearest competitor is offering so that if they do not offer best possible option, you have another choice of where to make the most of your money.
For the last 5 years I have worked in a high street bank. During this time I have specialised in helping customers get the best savings interest rates.

That's why I have created this special page to advise on the things to look out for when you want to get the best interest rates on savings.

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