Scrap the savings trap

Which? launches a new campaign calling on savings providers to free savers stuck in poor value accounts, as we find the vast majority of people (75%) don’t think banks do enough to help savers get a good deal.  

A third (35%) of people say they haven’t switched their main savings account because they don’t think it would make enough of a difference. Yet we estimate people are actually losing out on £4.3 billion a year by leaving savings in poor value accounts.

Our research finds that eight in ten (82%) of the easy access savings accounts and cash ISAs on the market are ‘zombie’ accounts closed to new business and often paying very low rates of interest. Four in ten (39%) of these pay 0.5% or less, of which 41% pay a pitiful 0.1% or less.

The savings market can also be confusing for customers with some accounts that have very similar names but pay very different rates of interest – for example, for a balance of £5,000, Halifax’s ‘Reward Saver’ pays up to 1.70%, while their ‘Saver Reward’ pays up to 0.1%. Similarly, the AA’s ‘Internet Saver (Issue 1)’ pays 1.36% while their ‘Internet Savings Account (Issue 1)’ pays 0.1%.

A number of providers also have several different versions of the same account paying a different rate, such as the Virgin Money Easy Access E-saver which has five different interest rates across 10 different versions.

With just 16% of people switching their main savings account provider in the last 12 months, it’s clear that banks and building societies need to do more to show people the value of switching and highlight the better products they offer. The Government included some measures for savers in the Budget, but further action is needed from the industry and regulator to help people make the most of their savings.


We are calling on banks and building societies to ‘Scrap the Savings Trap’:

  • Don’t leave customers languishing in sub-standard savings accounts – close ‘zombie’ accounts and move people’s money into one default easy-access or ISA account at the end of fixed terms.
  • Stop making ISA switching complicated and laborious – make switching quicker and stop limiting transfers into new ISAs.
  • Don’t leave customers in the dark about the best return on their savings – display interest rates prominently and consistently on all statements, annual summaries and online pages, improve notifications about the end of bonus rates or fixed terms, and ensure better offers are promoted by staff and in statements. 

Which? executive director, Richard Lloyd, said:

“With many savers never switching because they don’t think it will make a difference, savings providers should do more to help their customers get the best deal. They need to be clear about interest rates, let people know when bonus rates come to an end and make it easier for people to switch ISAs.

“Banks and building societies must scrap the savings trap and free savers from poor value accounts.” 

Notes to editors:

  1. Methodology: GMI, on behalf of Which? asked 5,000 members of the general public about their current account provider, and 3824 of those who responded completed the second part of the survey which asked them about their savings account provider. Fieldwork took place online, from 28th February to 16th March 2014.
  2. Zombie accounts: Savings account details and rates are based on a combination of data supplied by Moneyfacts and savings account provider websites. The Which?  savings booster tool is kept up-to-date on a daily basis and superseded ‘zombie’ accounts are monitored regularly. In March 2014, of the 1,999 easy access savings accounts and cash ISAs in the market, 1,641 were no longer available to new customers. 39% (646) of these accounts closed to new customers pay an interest rate of 0.5% or less. This has increased steadily over time and has jumped almost 90% since 2010. Of these accounts, almost 41% (263) pay 0.1% or less. The number of accounts paying 0.1% has increased almost 34% since 2010.
  3. £4.3 billion figure: Using Bank of England savings data and our own market and rate analysis, Which? estimates that there is a difference of £4.3 billion a year between the average interest being paid to UK savers in instant access and notice savings accounts and Cash ISAs at the end of March 2014 compared with the interest they’d earn in an equivalent Best Rate account.

Average interest rates:

Instant access savings account – market average (0.62%) – Best Rate (1.30%)

Notice savings account – market average (0.81%) – Best Rate (1.35%)

Instant access cash ISA – market average (1.28%) – Best Rate (1.65%)

Notice cash ISA – market average (1.47%) – Best Rate (1.85%)

This amount held in each type of account is based on the Bank of England’s estimation that £531 billion is held in ‘sight’ accounts accessed without penalty (e.g. instant access accounts), £232 billion is held in ‘time’ accounts (notice or fixed-term), and £228 billion is held in cash ISAs. We have made estimations to exclude interest-paying current accounts and fixed-term accounts, and account for the difference in average market rates between banks and building societies.

  1. 16% switched account in last 12 months: Populus, on behalf of Which?, interviewed 4000 UK adults online between 18th and 22nd December 2013. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules.
  2. Sign up to the ‘Scrap the savings trap’ campaign here.

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