Are you getting the most out of your savings?
Published 15 November 2011
Many savers could be missing out on the best returns on their money - due to savings accounts that offer very little interest.
In the current climate, getting the best returns on savings is a high priority for many. However, the Financial Times reports that many savers may be missing out on the best interest rates, due to a rise in so-called 'zombie' bank accounts.
'Zombie' accounts are basically savings accounts that don't accept new customers and pay very little returns on money deposited in them. Some financial analysts are concerned that banks and building societies are using the minimal returns on these accounts to fund newer, 'attention-grabbing' accounts they also provide.
In the past 12 months alone, the number of savings products that don't accept new customer deposits has almost doubled - from 650 to 1,211. Although these savings accounts are not actively marketed, they still hold substantial deposits.
There are concerns that longer-term savers are being short-changed due to the emphasis banks and building societies are putting on 'short-lived, high-interest' savings accounts designed to attract new money.
The Financial Standards Authority (FSA) said that 'bells and whistles' savings accounts, such as those paying out high interest rates for a limited period, could be bad news for banking customers.
A spokesperson for thinkmoney commented: "When it comes to savings accounts, it's important to do some research to find the best option for your needs. If you're looking to get the best returns on your savings in the long run, you should look carefully at what interest rates different accounts offer, and for how long."
The report follows news that many major banks are increasingly attempting to win back customer trust - by agreeing to be on their 'best behaviour'. In the wake of the financial crisis, nine of the UK's leading banks, including HSBC and Barclays, have signed up to a new 'ethical behaviour code', as part of a joint venture with the Chartered Banker Institute.
In an effort to ensure banking customers are getting the best service, those banks found to be falling short of high standards may be subject to tough sanctions.