‘Woeful’ interest for Isa customers
20 June 2016
- From the section Business
Banks’ most loyal customers are receiving “woeful” interest rates on their Individual Savings Accounts (Isas), a consumer group has said.
Which? said that banks had been more frequent than building societies in cutting rates on the tax-free accounts over the last six years.
Its analysis revealed rates as low as 0.05% when initial bonus rates expired.
The trade body for banks said savers needed to shop around during a time of low rates.
A spokesman for the British Bankers’ Association (BBA) said: “These have been frustrating years for savers. The Bank of England’s base rate has remained at a record low for several years and whilst this has been good news for borrowers, it has fostered a low-interest-rate environment, which has not been easy for many savers to bear.
“The introduction of the new personal savings allowance from this April means that most savers will no longer have to pay any tax on their cash savings. We always encourage customers to review their savings regularly and to shop around for the best deal for them.”
Consumer group Which? studied Isas and the frequency of cuts to interest rates from April 2010 to April 2016.
NatWest was the most frequent, making eight cuts across two accounts over six years. The bank said it had simplified its savings products and no longer offered teaser rates.
Generally, building societies made fewer cuts than banks over the last six years, Which? said.
Harry Rose, Which? Money editor, said: “Many savers simply want a provider they can trust to keep their Isa rate competitive. Too many banks are paying truly woeful rates of interest or are scissor-happy when it comes to cutting rates, often penalising their most loyal customers.
“Our research shows savers who don’t want to have to keep moving their savings about should consider parking their cash with one of the more reliable building societies, who have been better at not cutting their rates for existing savers.”
A recent study suggested money in best-buy savings accounts has fared better than the stock market over most investment periods since 1995.
This post was written by FSB News