Poor interest earned - best future option?

elcro67

Hi Everyone,

I hope someone on here can explain something to me and advise what my best options are...

I look after the finances for my elderly mother. She has £57k in an Abbey (now Santander) flexible saver account and has been earning approx £1400 interest annually for the past few years. This year she got £61 which upset her quite a lot! I wrote to Abbey for an explanation of how this had been calculated but they just wrote back saying it was correct and if Mum wanted to know the exact calculations it would cost her £10 adding further insult to injury!!

According to the MSE savings calculator I have worked out the interest of £61 equates to 0.134%!!! Mum is so upset that even though she's been a loyal customer of Abbey for many decades she wants to close the savings account and take her money elsewhere and she's relying on me making the right choice!

So - does anyone know why her interest was so low this year? I know times are bad but this seems particularly bad! And can anyone recommend the best savings account to transfer to? She needs easy access as these are her life savings and she needs to know that in an emergency she can get to her cash without any problem.

Thanks for reading and for any advice you can give me in advance!

And Happy Easter to all!

OneADay

No explanation, all the banks virtually rip off customers with instant access saving accounts (they pay virtually zero percent) - so variable rate accounts are not worth having.

Look at moneysupermarket.com for the right type of accounts.

Does she need access to all the money all the time?
If not, why not split between ISA accounts, fixed rate bonds and short term 6 month bonds.

apt

The current rate of interest for a flexible account with passbook is 0.1%. Santander does have other instant access accounts which will pay 2.5% for the first year, e.g. Instant Access Saver (Special Issue 3). Otherwise look at the comparison sites. But many of the better paying accounts are internet only which may not suit your mother. It would make sense to put part of the £57,000 into the best paying fixed rate accounts. There is nothing wrong with variable rates in themselves, but you need to monitor what rate you are getting regularly and be willing to move your money when the rate drops.

martinman3

Northern Rock have a branch based instant access account, Branch Saver Issue 3, which pays 1.9% AER on a minimum £1.
http://www.northernrock.co.uk/savings/branch-and-postal-accounts/branch-saver/

p.s. Don't leave all of it in just one account (or one organisation) as I am sure that the £50k compensation limits would be enforced in future.

elcro67

Thanks for the advice.

I need to keep things as simple as possible but think an online savings acc for the bulk of her savings and then something local for the rest of it seems like a reasonable solution.

I'll be checking out moneysupermarket first.

As for Northern Rock... Boo-hiss!!! I won't be giving them any custom - I have a 'thing' with them.

Thanks again.

cepheus

Just taken my mum down to the Halifax to change her cash ISA. I asked the manger in front of a line of people how much she was being paid, answer quietly 0.1%! She was disgusted. Changed it to another cash ISA paying 2.6%, so now she loses only half a percent, instead of three per cent a year relative to inflation!

My own view is that any financial institution should have to explicitly warn customers that their money is reducing in value when their savings rates fall below the CPI.

hunsbury0

I used to have an ISA with Abbey who were the one of the top payers but when I checked the interest rate last year it was 0.10% !!!.
So from now on I have all my ISAs fixed for a year & check every year & do the same every year.
I would like tofix for a longer period but as the rates are too low, I only fix it for one year & hope that the rates will rise in future.