It’s normal for banks and building societies to throw out excellent deals to snag new customers, only to then take the cherry off the cake as soon as they’re signed up. From loans to credit cards toand so on, you benefit from a great offer for a year or two, only to then be thrown on the short-changed pile with everyone else.
And as far as consumer watchdog Which? is concerned, it’s no different in the world of ISAs, either. In fact, they’ve gone on record as saying that the kinds of interest rates being offered to consumers right now are nothing short of “woeful”. Why? Well, quite simply because for the past six years, banks have been systematically slashing the interest rates offered on their IndividualAccounts, to such an extent that longer-term customers are being offered almost nothing in return.
Quite literally – as low as 0.05% in some cases, when the initial offers and bonus rates had expired.
Which? has lashed out at the banks and building societies involved for clearly serving up a raw deal. But at the same time, they’ve also issued an urgent call to the public to be more proactive, when it comes to both shopping around for a better deal and looking at the long-term details of the accounts they set up.
“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,” said a British Bankers’ Association spokesperson.
“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.”
The study carried out by Which? focused on the interest rates attached to ISAs form April 2010 to April 2016. During this time, the base rate set by the Bank of England remained unchanged at 0.5%. They found that over the course of these six years, NatWest was the worst offender, having made no less than eight cuts to interest rates on two different account types. When questioned, NatWest insisted that it no longer offered misleading introductory rates and had worked to simplify its products and services.
Which? did however find that building societies in general had fared better, making fewer cuts over the same period than banks.
“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,” said Which? Money editor, Harry Rose.
“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.”