The ups and downs in Savings Accounts

Ever since interest rates started falling, as the Bank of England began slashing the base lending rate to its record low of .5%, it's hardly been possible to read a paper or blog without the worrying impact on savers, some of whom are very vulnerable to effect of interest rate cuts, being a major part of the story.

Savers do however seem to be just about on the point of turning a corner. Many banks and building societies are beginning to make improvements to their interest rates for savers. And to be fair to some, not every bank and building society passed on the full amount of every base rate cut so that they didn't have to penalise savers with an interest rate cut.

However just because some companies did this don't assume that all savings accounts continue to offer good value for money. With well known personal finance giants offering accounts with appealing names such as "liquid gold" and "premier account" you might reasonably expect these accounts to be among the best which are on offer. Not necessarily, says a report which has just been published. It names and shames the 50 worst savings accounts on offer, finding that with interest rates as low as a measly 0.1%, or even less, it's more like "base metal" and "Division 4" in some cases. No matter who you're saving money with you should make sure that the interest rate you're getting is at least competitive, don't just assume that the account you took out years ago is still a good one. At least the Advertising Standards Authority is doing a bit more, by threatening to investigate, than the banks' Standards Board who rather feebly said that there was clearly room to review (yes, "review", not "change") the way banks promoted such accounts.

Maybe surprisingly, the Government are actually leading the way with a 1% rise in the interest rate on National Savings main instant access account. Underwhelmed? Well it does mean up to a 100% rise in the rate payable, so that looks like a good jump to us, so much so that for the first time in years the account appears as a best buy.

Being a best buy has clearly upset the building societies who have accused the Government of providing unfair competition from both National Savings and the banks which the Government own. They might be right - there is a bit of an edge to have, at least the perception of, providing as close to 100% security as you can ever get, with a decent return. Indeed it's had the effect of all but two building societies bailing out of the high interest instant access market, which leaves the question of what they're offering that's worth having to a whole new blog.

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