I feel rather insulted

Phaelok

Hi all,

I just received this email from Natwest today....

Making the most of your tax free allowance in a cash ISA is a great way to save and you’ll soon have the opportunity to save even more tax free when the allowance increases to £15,000.

However, since we last wrote to you about your Cash ISA, savings interest rates in the UK marketplace have continued to go down. Because of this we reluctantly need to make changes that we understand will have an impact on our savers. From 1 August 2014 we’re reducing the interest rate on your variable rate Cash ISA.

As you are a loyal NatWest customer, however, we are happy to extend your additional interest rate of 0.30% Gross p.a. (fixed). This will be for a further 6 months until 2 February 2015.

What does this interest rate change mean for you?
As an example, if your balance is £1,000, it means you’ll receive £7.50 in gross interest per year instead of £10. This excludes your additional interest rate of 0.30% Gross p.a. (fixed).

New increased allowance and more flexibility for your ISA
From 1 July 2014, you’ll be able to save up to £15,000 for the 2014/15 tax year. This can be in a cash ISA, a stocks and shares ISA or split between the two. You’ll also be able to transfer existing stocks and shares ISA balances into your Cash ISA for the very first time. To find out more visit natwest.com/newisa.

We hope you’ll want to keep your Cash ISA with us, however, if you’d like to move to another provider then we can help with that. While this is the only variable rate cash ISA we offer, we do have a number of other products to help you save. We’d be very happy to talk to you about them and you can look at our full savings range at natwest.com/savings.

I cannot understand how they can pay regular savers such low interest rates yet charge such higher rates on loans and credit cards.

Am I missing something here :shocked::shocked:

butterflymum

Unfortunately, loyalty doesn't seem to count for much with many banks nowadays. What you're missing is, better rates elsewhere. Best option would be to look around and see which other provider meets your needs.

innovate

They are all dropping ISA interest rates now, ready to exploit NISA-mania and all those poor loves who will flock to the slaughter and put their £15K into cash ISAs on July 1. Or worse still, liquidise some of their S&S ISAs and transfer them to cash.

0.75% incl a 6-month bonus of 0.3% is taking some extra mickey though.

http://www.telegraph.co.uk/finance/personalfinance/savings/10898201/Patient-savers-hit-by-rate-purge-ahead-of-15000-super-Isa-launch.html

jimjames

innovate wrote: »

http://www.telegraph.co.uk/finance/personalfinance/savings/10898201/Patient-savers-hit-by-rate-purge-ahead-of-15000-super-Isa-launch.html

Thanks for the link. I find it very hard to understand the mentality of anyone they seem to have found such as those below:

This has compounded provider concern that a new ability for savers to transfer money from shares Isas to cash Isas will cause an inflow into cash accounts.

Moving S&S where you have decided you are prepared to take some risk but could get 4% yield to under 1% doesn't make any sense to me.

I guess all the time that people flock to ISAs rather than using the far better paying alternatives then the banks will continue to pay a pittance.

bigadaj

I wouldn't feel insulted OP, just laugh at the stupidity of it all and take some comfort in the fact that you won't be one of the loyal customers taken in by such a derisory offering.

It just reinforces to me what a complete disaster the financial crisis was and how we are still suffering from it. Bankers screwed up and the rest of the populace are paying for it still, six years on and the banks balance sheets still need this level of support. The ultimate irony is that since the public still own big chunks of two of the largest banking groups then we either pay for it this way or by writing off the bail out, though even with this level of support to banks margins it's not clear if the bail outwon't get written off in any case, in real terms at least as the only the nominal sums of support may be received back several years after the emergency bail out.

PeacefulWaters

Sit there, do nothing and feel insulted.

Or move your money elsewhere to earn more.

Not rocket science.

I cannot understand how they can pay regular savers such low interest rates yet charge such higher rates on loans and credit cards.

It gives them half a chance of making a profit. Unless a few of those with loans and cards don't pay back what they owe.

Glen_Clark

They don't want savers cash because they are awash with taxpayers money through QE and funding for lending, 'Help to Buy etc.
What they want is more current accounts because they give them a chance to make profit by selling extra services or imposing punitive charges. So they are offering £100 switching bonuses and half decent interest rates on new current accounts as bait to hook you in. You can play this to your advantage......

ViolaLass

Phaelok wrote: »

I cannot understand how they can pay regular savers such low interest rates yet charge such higher rates on loans and credit cards.

Am I missing something here :shocked::shocked:

How do you propose banks make money if not by charging borrowers more interest than they pay to savers?

Vortigern

We hope you’ll want to keep your Cash ISA with us, however, if you’d like to move to another provider then we can help with that.

Call me a cynic, but I wouldn't have much faith in the latter part of that statement.

BillJones

Phaelok wrote: »

I cannot understand how they can pay regular savers such low interest rates yet charge such higher rates on loans and credit cards.

Am I missing something here :shocked::shocked:

You are probably missing two factors, yes. The first is that they are a company incorporated for the purposes of producing a profit. This separates them from, for example, Oxfam, and means that they want to sell things for a higher amount than they buy them. Like tesco.

The second is how good the credit is in each case. Money you deposit with them is safe. They will pay it back to you. Money lent to you, on the other hand (you being a general member of the public) is at much greater risk. You may die, run away, or just decide that a new iPhone is better use for your wages than paying back your debts, and so a higher rate of interest needs to be charged to cover these eventualities.

If you can show yourself to be a good risk, then you can get lower rates. I borrowed at 4% APR last year, and the year before I borrowed for five years at 2.8%.

Maybe the rate is too high, and maybe it;s not. The raw numbers don't tell you which is the case.

BillJones

bigadaj wrote: »

Bankers screwed up and the rest of the populace are paying for it still, six years on.

Well, some bankers did, and fundamentally their mistake was to lend to people such as the OP at too low rate and without enough security.

Seemingly we were wrong to do so, and are also now wrong not to do so.

It's a funny old world, really...