Savings: Scandal of obsolete account that pays 0.1% interest

[Legal Beagles]

Tony Levene calls for action as banks push new deals and let rates on existing accounts slide

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[argentarius]

Re: Savings: Scandal of obsolete account that pays 0.1% interest

There's a limit to how much spoon-feeding bank customers should need. As the article points out,

More recent wording introduced into the code requires banks to do no more than contact customers "within a reasonable period" to tell them if an account is superseded and offer to help switch to another account "if you want to". This means that the vulnerable, apathetic or too busy, lose out .

So the only customers who are receiving 0.1% on their accounts are those who have been notified that their rate is this bad, and who've failed to do anything about it.

It's impossible for banks (and building societies) to pay loss-making rates on all of their account, all of the time.

Either they can pay everyone the same rate - but that rate will be less than bank base rate, and therefore will offer a sub-inflation rate of return after tax (something else the newspapers criticise all the time) - or they have to offer good rates on accounts for those who actually monitor the rate they are receiving, and poorer rates for the apathetic.

ING entered the market with a "we pay everyone the same rate" claim, which was great. But after a few years, that "same rate for everyone" fell and fell until it is way off the most competitive.

So, what are ING doing now? Exactly the same "introductory bonus", loss-making, rate deal that many other institutions have adopted.