Shocked at annual interest on savings

dunstonh

MadMat wrote: »

Indeed, Compare the Market recently gave me a quote for car insurance that was over £100 less than the renewal figure I was sent from the same company!

Mat

The comparison sites are largely to blame for bonus rates on savings and early year discounts on insurance as providers push their way to the top as people generally buy on price (not quality).

droopsnoot

I seem to get varying notifications, some banks are better than others. Some online banking makes it easy to find the current interest rate I'm receiving on a specific account by displaying it in the account details, some just link out to a generic 'products' page where I have to figure out which account I have from several confusingly-similar product names, then figure out which rate applies to me.

Halifax recently wrote to me to say my bonus rate was disappearing - they didn't have to, I knew when I signed up last year that it would only last a year and they could have just not bothered telling me again, and in fairness sending that letter cost them money, both in printing and postage costs, and because they don't have a simiilar account to move it to, so the money will be taken away. It was good of them to write anyway, but you can see why some don't - it's just encouraging people to look elsewhere, and businesses generally don't like to do that to their customers. Nationwide periodically send me a summary of what I have in there and what rates it is earning.

Although I like to think I keep on top of things, in general I'm struggling to find places to move cash to in order to get a decent rate, so I am guilty of having some stuff in very low earning accounts. So I read up on S&S ISAs and general investing, my eyes glaze over, I do nothing about it, then start again. Haven't used a fraction of my ISA allowance yet this year, and I'm usually filling the cash one on April 7th.

jimjames

droopsnoot wrote: »

Haven't used a fraction of my ISA allowance yet this year, and I'm usually filling the cash one on April 7th.

I assume you've read all the threads on here about ISAs vs current accounts?

Unless you've already filled all the high interest current accounts there seems very little point in a cash ISA.

nilrem_2

jimjames wrote: »

I assume you've read all the threads on here about ISAs vs current accounts?

Unless you've already filled all the high interest current accounts there seems very little point in a cash ISA.

Maybe I am missing something here but surely the point of cash ISA's is that you are building up a nest-egg of Tax free savings which will be of benefit in the future when interest rates are higher? Assuming of course that one is a taxpayer. Well that's mainly the reason that I am still saving in Fixed term cash ISA's.

I would be interested in different viewpoints on this?

Mistermeaner

nilrem wrote: »

Maybe I am missing something here but surely the point of cash ISA's is that you are building up a nest-egg of Tax free savings which will be of benefit in the future when interest rates are higher? Assuming of course that one is a taxpayer. Well that's mainly the reason that I am still saving in Fixed term cash ISA's.

I would be interested in different viewpoints on this?

Im in this boat too and also because im lazy and cant be bothered with loads of accounts and transfers etc

Only got a few grand in my isa so not really worried about it at the moment

Archi_Bald

nilrem wrote: »

Maybe I am missing something here but surely the point of cash ISA's is that you are building up a nest-egg of Tax free savings which will be of benefit in the future when interest rates are higher? Assuming of course that one is a taxpayer. Well that's mainly the reason that I am still saving in Fixed term cash ISA's.

I would be interested in different viewpoints on this?

You are missing that the majority of UK people have just a few thousand in their ISAs, if indeed they have got any savings at all. With the annual allowance now being £15K, it would be no problem at all for them if they didn't use any of their ISA allowance this year or next or the year after etc. - they could still move their entire savings into an ISA at the drop of a hat if the ISA rates ever improved.

The emphasis should be on how much interest people can get for their money, this year, next year, the year after and so on. The other consideration is when they expect to need/want to spend their money. For the majority of people the answer is that they get a lot more interest in current accounts at present, and could at any time put their entire savings into a cash ISA easily. Keeping the money in a cash ISA instead just makes no financial sense for most people with the present rates.

Even for those who have tens of thousands sloshing about, keeping money in cash ISAs (instant or fixed term) is not necessarily the smartest option, as equities have historically always outperformed cash in the long run.

James_B.

Birdynumnum wrote: »

was told the interest rate fell in year 2 from 1.5% to 0.1% 15 times less than the previous year. The bank said they had written to me to inform me of this but I recall no such communication. I said given the difference in interest rates, some 1500%.

That truly is some terrible innumeracy there.

Tell me, if something is half price, do you think that it's "200% off"?

James_B.

Altarf wrote: »

Of course it has everything to do with morals.

It is one thing offering a small incentive to attract new customers. It is entirely another matter luring people in, and then paying effectively zero interest.

But you don't have to worry, because you, like the others who see know wrong, are "smart" enough to know about this profitable business practice.

"See know wrong"?

Banks themselves deposit Euros as negative interest rates. They actually pay money to place their deposits. If they are receiving negative interest themselves, how much exactly do you think that they should pay for funds, and why?

nilrem_2

Archi_Bald wrote: »

You are missing that the majority of UK people have just a few thousand in their ISAs, if indeed they have got any savings at all. With the annual allowance now being £15K, it would be no problem at all for them if they didn't use any of their ISA allowance this year or next or the year after etc. - they could still move their entire savings into an ISA at the drop of a hat if the ISA rates ever improved.

The emphasis should be on how much interest people can get for their money, this year, next year, the year after and so on. The other consideration is when they expect to need/want to spend their money. For the majority of people the answer is that they get a lot more interest in current accounts at present, and could at any time put their entire savings into a cash ISA easily. Keeping the money in a cash ISA instead just makes no financial sense for most people with the present rates.

Even for those who have tens of thousands sloshing about, keeping money in cash ISAs (instant or fixed term) is not necessarily the smartest option, as equities have historically always outperformed cash in the long run.

Well obviously Cash ISA's are not ideal for everyone but surely I can't be the only one who finds them very useful to help their tax situation especially as rates on many savings products are very low. I have built up quite a large amount of tax free savings in ISA's over the years and they suit me fine.

Equities may well outperform savings but like quite a few people they are not for me. IMHO if you have decent savings and pay tax ISA's are not that bad.

Hooloovoo

In addition to everything said so far, it's important to realise that even if it were technically feasible for a bank to telephone every customer and inform them of better products, often they can't do that because you've ticked the "no marketing calls" box.