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MSE News: Plans to make it easier to compare and switch savings accounts revealed
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So 80% of accounts have not been switched - how about the money in them? I've had an easy access account for many years, but it's never had more than a nominal amount except for when the proceeds of a regular saver was passing through it. Was that - and thousands like it - included in the 80%?Eco Miser
Saving money for well over half a century0 -
I think I know my way round simple savings products but it can sometimes be something of a nightmare sorting out what the current interest rate is.
I think all statements, online or paper, should include the current interest rate and the expiry date of any introductory offer. It can't be that difficult, surely, for the savings institutions to provide that sort of basic information where it can easily be found.
I suspect a number of savings "anoraks" are frightened that if more people can easily access this basic information, they may use it to get better rates which might reduce the rates that might otherwise be available.
If savers are just plain lazy, then no amount of information will persuade them to switch accounts. So I don't understand the reluctance to provide the information.
Warning: In the kingdom of the blind, the one-eyed man is king.
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So 80% of accounts have not been switched - how about the money in them? I've had an easy access account for many years, but it's never had more than a nominal amount except for when the proceeds of a regular saver was passing through it. Was that - and thousands like it - included in the 80%?
It's probably not so much the the 80% but rather the £160bn (billion) that languishes in these accounts at same or lower than BOE rate (0.5%), according to the FCA. Read the FCA report, it's an eye-opener. Total in savings accounts is around £700bn, btw.
No doubt there are countless £1 accounts involved that have been sitting there for years - about a dozen from myself - but £160bn is a staggering amount of money. Probably a fair whack of it is sitting in cash ISAs that people have never transferred but are immensely proud of as they have a tax-free account.
£160bn is around £2,700 on average for each and every UK adult saver (only some 7% of UK adults have no savings at all acc. to FCA). Though the FCA says that at least £145bn (90%) of the £160bn is held in accounts with more than £5,000.
As we know, most people should be able to get a multiple of 0.5% AER - and the potential increase in tax revenue shouldn't be snuffed at either. Even if only 25% of the tax in my table below could be raised (due to R85s and ISAs), eye-watering amounts of money could be raised by people who would themselves get from at least double to 6 or so times the amount of interest they get today. How's that for doing something for your country whilst also making some extra for yourself! If everyone of the owners of those £160bn got off their potty, we would have enough money to e.g. see every pothole in the country repaired overnight, and a few other problems fixed as well. That's assuming banks wouldn't just pull all their higher than 0.5% interest rates, lol.
I have done some very crude calculations to illustrate some different scenarios.
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Thanks for that analysis. I've done a crude calculation myself - if all that £160 billion was moved from .5% to 3% the banks would be paying out an extra £4 billion - so, yes, they probably would cut the rates back to .5% or so.Eco Miser
Saving money for well over half a century0 -
Some people are lazy when it comes to finances, and I think we should thank them, for it's because of them that people like us manage to get good deals, free stuff and low bills. A lot of marketing relies on giving away to the few while taking a whole lot more from the many. How many people have to get into debt to finance the 5% cashback rate on credit cards which sees companies like Capital One give back more than £100 a year to some customers? It's a calculated risk and the house always wins. As for these proposals, let's put it down to people in endless meetings, pushing around bullsh*t like dung beetles.
For now, open as many of those capped high interest current accounts (stagger it or your credit file will burst). You can have 2 Santander 123s, 2 Tesco Bank, 3 Bank of Scotland, 2 TSB, 1 Halifax Reward, 1 Lloyds Club, 1 Clydesdale bank (with current £150 switching offer). Some of my (not exactly stupid) friends still actually think it's against the law to have more than one current account, I don't know where that thought comes from!
Then you simply have to push the same £1000 around them all once a month (or £1500 for Lloyds Club). Some require monthly direct debits, but you can open as many savings accounts as you need without affecting credit ratings to fulfil this. Banks with savings accounts that can be funded by direct debit include Tesco Bank, AA Savings, BM Savings, Britannia Savings, Post Office Savings.
With so many taking advantage of low rates for borrowing at the moment, it'd royally screw things up if the base rate went up any time soon, it's almost like they're creating a credit bubble that's ready to burst...0
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