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 Thursday, 9 January, 2003, 05:02 GMT
Poor accounts 'penalise UK savers'
Piggy bank
Low interest rates mean savers need to be shrewd
UK savers are losing 5bn in interest by keeping their money in poor-paying accounts, according to the Consumers' Association.

A lot of people are missing out on a potential pot of cash

Helen Parker, editor of Which?

With current interest rates so low, and after inflation and tax are factored in, many people are actually losing money from their savings, the consumer group said.

The association is urging people to ditch the plethora of low savings accounts - some which pay interest at just 0.1%.

Someone switching from one of the worst accounts - the NatWest Diamond Reserve Notice - to a better account, for example, could have gained an extra 545 after basic-rate tax over the last two years.

The report singles out a range of banks and building societies for their low rates.

Worst interest on 1
Bristol & West (instant access) 0.1%
Chesham Building Society (30 Day) 0.1%
Clydesdale Bank (instant access) 0.1%
Dudley Building Society (instant access) 0.1%
Halifax Liquid Gold (instant access) 0.1%
Leek United building society (instant access) 0.1%
Loughborough building society (instant access) 0.1%
Newcastle building society (instant) 0.05%
Yorkshire bank (instant) 0.1%
*Source: Chase de Vere Moneyline

Particular sinners, according to the Consumers' Association, are Abbey National, Alliance & Leicester, Bradford & Bingley, Halifax, Lloyds TSB, NatWest, Royal Bank of Scotland and Yorkshire Bank.

They all have the worst-paying notice accounts, as well as the worst-paying easy-access accounts.

Just because these companies have some poor accounts, that does not prevent them from offering good rates too.

Abbey National, Alliance & Leicester and Halifax not only have some of the worst accounts, they also have some of the best.

For example, 2,500 kept in a Halifax Liquid Gold account for the past two years would have earned just over 30 interest after basic rate tax had been deducted.

The same amount in Halifax' s internet-based Web Saver account would have earned more than 220 - more than seven times as much.

Your rights

From 1 March savers will have new rights.

They must be informed by their bank or building society if their interest rate falls by more than 0.5% relative to the base rate over a 12-month period.

Savers can then choose to withdraw or transfer their money, without penalty.

Helen Parker, editor of Which? said: "Even if your savings aren't in one of the worst-paying accounts, it still pays to keep an eye on rates, and switch if necessary. A lot of people are missing out on a potential pot of cash."

See also:

30 Dec 02 | Business
29 Oct 02 | Working Lunch
11 Oct 02 | Working Lunch
14 May 02 | Business
17 Sep 02 | Cashing In
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