Accounts open only to New External Money - totally against Fair Competition

jamesd

SeethingSaver wrote: »

Financial bodies need to act fairly and competitively, this way of getting a quick injection of money is neither.

Wrong. It's competitive.

It's a very common practice for savings, credit cards, insurance and such because consumers who are shopping for a new account will generally choose the best deal at the time they are shopping. That creates a competitive penalty for not competing with those providers who are offering better deals for new accounts. If you don't compete, you don't get the business.

To change this, change consumer behavior.

SeethingSaver wrote: »

There is no defence or justification for these unfair accounts not completely open to all and money from anywhere.

The defense is easy, it's a normal response to competition.

Changing consumer behavior is the remedy.

If all consumers switch accounts as soon as any initial deal ends, that will eliminate the ability to benefit from offering better rates initially, because all consumers will be on those initial rates. It won't take all consumers but it will take more than are doing it now.

NS&I certificates offer long term rates with automatic rollover into the new certificate after the term of the first expires. The deals are usually not the best available in the market but it is consistent. At the moment the index-linked certificates are quite interesting for those who think inflation will rise, particularly higher rate tax payers.

Consumerist

The reason banks can and do get away with this practice is that the vast majority of us put up with it.

If all existing savers moved their money out then any bank would think twice before favouring new customers.

Egg has a habit of doing this but I find I get immense satisfaction from moving all my money out if they are offering to new customers a better rate than I am getting. It comes straight back two days later into a new account if it's at a better rate than I can get elswhere.

On the other hand, I would be in a terrible quandry if they were to offer a bonus only to customers who have already been saving with them for a predetermined period.

Loyalty is overrated - there's no money in it. Far better to play them at their own game and just chase the ace.

jamesblue

It is the same in insurance companies too. How many of use have been with a company for a couple of years, then they have a offer of pay 10 months for 12 months cover.

But when a current customer asks about it they are told it is for new customers only and usually they have a clause like ING, where you cannot be a customer of theirs for 6 months, before you can be classed as a new customer.

I think everyone should take the attitude that if companies do not give you any sort of loyality, then we should not too. I use to work for a BS and the term they have for people that swap and change for best rates is "rate tarts".

Consumerist

And the ambition of this site is to make everybody a rate tart. I am pleased to say I've been a rate tart for years and proud of it ! (well, satisfied, anyway).

What name would you call a BS or bank which changes rates without giving notice (or hiding it in one of a number of newspapers) ?

- rate fart, perhaps. The initial rate disappears into thin air and leaves an awful stink.

Edit:
BTY from 01 May, banks must give 60 days notice of a change of interest rate (on most savings accounts) - has everybody checked their rates to see if there has been a quick rate change before this notice needs to be given ?

SeethingSaver

Aegis wrote: »

I borrow and I save. As do most people in the UK in some form or another. I've been lucky with my borrowings, but I've also managed my savings and investments effectively, and therefore have done pretty well now that we're at the other end of the market problems. Regardless, I still utilise savings accounts and therefore still have a valid opinion as to how they are operated by the banks.



Which would be a consequence of the terms and conditions of the account. A "new money only" term is fairly common, and a bank is perfectly within their rights to offer an enhanced product for new business. They risk annoying their existing customers, but the only way to effectively object to this treatment is to move your money away. It's a good way to protest.



We're not suffering, the low interest rates are designed to keep the recession at bay. Even so, the interest on savings accounts has until recently been in excess of the inflation rate, meaning the real return has actually been somewhat higher than usual.

You have obviously done better out of things than most people, not everyone is so fortunate. Some have to rely on fixed incomes and have little choice to be able risk speculation of the precious savings they have worked for so have unquestionably suffered by these stupidly low interest rates (probably held as long as they have been under pressure from the government for forthcoming election popularity reasons despite the supposed autonomy of the bank of england). You I don't think would have been a very happy bunny in the days when some of us were paying 13% upwards for our mortgages would you?

The myth about actual real returns being to general benefit is I would say another aspect of government manipulating figures and publicity for their own ends.
Day to day unavoidable items like food, heating, petrol, council tax and so forth have increased well in excess of the official reported inflation figures - where on earth they manage to come up with the numbers they do for their magical inflationary assessment basket defeats me. If you haven't noticed that prices in your supermarket have actually been going through the roof for staple things then examine the quantities in packets, maybe prices appear to be the same but where that is the case look at the quantities then you will probably see they have been going down!

Again I would say get real with your thoughts of ways to protest, taking away your few thousand pounds from a bank is not going to have them quivering into acting honourably. In any case under what I would perceive is your train of philosophy if the bank or society is offering an advantageous rate to money coming in from outside so you would surely launder your money out to another bank then back in as new money to get their better deal. That is not hitting them where it hurts is it? And why shouldn't you move your money that way to get the best deal for yourself.
You are missing the point that many people are not that devious for various reasons not necessarily apathy as another contributor mentioned. My father is over 90 he is totally unable to keep track of the changes new accounts conditions and circumstances that are constantly coming along month in month out.
I have enough trouble arranging everything for myself yet alone having to see to his things too.
Last year I spent weeks dealing with everything needed to play the annual ISA merry-go-round season that is on us once again, when you find your current ISA has gone down to next to nothing so you have to find not only a new deal but places where you can transfer your ISA to that will accept external movements to them.
The overbearing amount of work the ordinary person has to do just to get a reasonable return for their cash is ridiculous and don't banks etc. play on that with their ISA rates... they know you have them to make use of the extra tax free allowance benefits so they conspicuously do not usually offer as good rates for ISA's as other savings.

Lets face it the financial industry doesn't just annoy people it does nothing to simplify or stabilise matters which is what everyone could well do with.

SeethingSaver

Innys wrote: »

I do happen to have elderly parents and, yes, they do suffer at the hands of financial institutions in that their money doesn't work hard enough for them.

I have tried to help them by advising them that loyalty doesn't pay and the response I get is "That's too much like hard work - we just can't be bothered". In fact, it's the same response I get from my siblings when I try to help them

This, I feel is the nub of the issue - a lack of willingness by the general public to take responsibility for their own actions. It's far easier to blame someone else or simply complain about how hard they have been done by.

I don't deny that I dislike over complex terms and conditions. However, I take responsibility for my own actions and therefore am prepared to jump through the hoops to get the reward. Plus, with the wealth of information available, including that on sites like this, there's not much excuse, is there?

As for your second point, the sad fact is nothing anyone says on forums like this is likely to precipiate the kind of sea change in the Industry you feel we should be pushing for.

In summary, no, I don't like the system, but I will live with it and use it to my best advantage. If you wish to start a one person crusade to change it, by all means go ahead, but I don't think it's quite as bad as you make out.

Does it sound like there is potential for a 2 man crusade there Innys?
It is bad and it is not getting better I must have some 35 to 40 accounts at a dozen places just to be able get rates when they change from one place or another, that is ridiculous I think....some of the comments I just replied to Aegis are applicable here I won't fill the forum up by duplicating them.

jamesblue

SeethingSaver wrote: »

Does it sound like there is potential for a 2 man crusade there Innys?
It is bad and it is not getting better I must have some 35 to 40 accounts at a dozen places just to be able get rates when they change from one place or another, that is ridiculous I think....some of the comments I just replied to Aegis are applicable here I won't fill the forum up by duplicating them.

I think MSE should get petition together together to force online accounts, to should the current interest rate they earn

SeethingSaver

dunstonh wrote: »

Whilst I have some sympathy with your view on accounts for new money only, I do get am beginning to get a bit fed up with anti bankers posts and attitudes of some.

Banking is not the first industry that has required taxpayers funds. Retail banks are also not to blame for the scale of the problem. If you are going to negative towards bankers then you may as well be negative towards every industry that has taken taxpayers money over the years.

Politicians are the worst. Anyone earning over a certain amount now is a considered a banker. So, a hit the higher earners with another new tax is promoted as bash a banker.

Politicians are also to blame for the scale of the problem. Gordon Brown borrowed and borrowed to spend and spend as if the bad days were never to return. Rather than reduce debt when we had the money to do so, he increased it. The banks are not to blame for that. Indeed, without the tax brought in by the financial industry over the last 10 years the country would be an even bigger basket case.

Banks and building societies do a lot wrong but lets get past the rather silly bash a banker attitude that now exists.

Back on topic for your post, the "new money" approach is not that different from the car and house insurance situation in reverse where they heavily discount, even sometimes at a loss, to new customers but wont offer those terms to existing. Sky do it with their digiboxes offering free boxes to new subscribers but existing had to pay for an upgrade. Its nothing really new but it is damned frustrating at times.

The savings rates offered are fairly consistent with long term average "real" returns on savings. So, whilst they appear low, they aren't really in real terms. The only people losing out now are not savers but those that use cash to generate an income. That is rarely a good thing to do at any time but especially isnt now.

Not consciously intending to bash anyone but lets face it there are few industries no matter how much they have had public money pumped into them that have brought countries and currencies to their knees like the banking sector, if we are to believe the media.
Agree with the comments about governments prudently reducing debt when feasible although surprised you said it - surely that's a planned economy, a communist characteristic ???
Can't quite grasp the concept where putting your savings into somewhere that is going to provide a know reliable amount of return for a hopefully lengthy period of time is the same as deciding if you buy a packet of cheese from tescos or Aldi.
Moreover I would actually put forward there is not enough control or restriction on the ability of banks/building soc, etc. to vary interest rates to the level these organisations do. For me if I have put money into an account which is pitched at a certain level of return then that return should not be allowed to be altered to such an extent that the account no longer holds the same relative positional standing in the market. This happens only too often and these days increasingly after quite a short time period. As I have said previously Accounts are discontinued rates for them dropped to virtually nothing and another virtually identical new account put in their place to supercede them a totally dishonourable practice to my mind brought in to do nothing but take advantage of customers trust.
No I don't mean to bash anyone but you can't say the banks don't do a fair amount of customer bashing themselves can you?

You are right banks do do a lot wrong; let me just cite one instance of the old woolwich flexaccount. This was a good account, money was automatically switched for you from your savings account to your current account when bills needed to be paid. It ensured surprise debits would not be unpaid and you got the maximum amount of interest possible. barclays when they took the woolwich over totally ruined the way the account operated, still calling it the same but taking all the real flexibility out. Why? The software to operate the accounts was all there up and running so why not continue to run the accounts as they always had operated?
This is not to mention the seeming loss of pertinent woolwich customers details in the takeover resulting in those clients although they have had operating bank accounts for years being unable to open new accounts with barclays without providing details to once again prove who they were!!!
(Anyone else been affected by that?)
Yes banks do a lot wrong there is no argument there.