So, spring is finally in the air and, with the prospect of a new tax year on the horizon, many of us will be thinking about moving our money into a new savings account.
Certainly, the juicy carrot in chancellor George Osborne’s Budget, a new £15,000 ‘super Isa’ allowance, may also have whetted your appetite for change. From July 1, stocks and cash Isas will be merged into this large single annual allowance, in a move welcomed by savers’ campaigners who’ve been calling for the rules to be simplified.
There’s another type of savings product that’s been receiving less favourable headlines, though; the so-called ‘teaser’ account. This account attracts people in with high introductory rates of interest that often last around 12 months. After that, sometimes the rate plummets without the customer realising this “best before” date is up, and their money is now languishing in a deal turned sour.
Some banks have recently announced they are scrapping introductory bonuses on their savings products in moves to make their accounts “simpler” for customers to understand.
But are teaser savings accounts always a bad thing?
Some commentators have argued that in the current low interest rate environment, any bonus is better than nothing.
According to recent research from consumer group Which?, six years ago the average instant-access savings account paid a rate of 4.14%, but that has now plummeted to 0.63%.
Martin Lewis, founder of consumer help website MoneySavingExpert.com, says that with interest rates at ultra-low levels, the timing of many bonus rates being scrapped “could not be worse”.
“My real concern is that in aiming to make things more transparent and simple, we risk ending up giving many savers a worse deal.
“Those in retirement who have built up savings pots, expecting to live off the earnings, could be penalised. Many in their 60s and 70s worked hard for their savings, and have been actively managing them in their retirements to boost their returns.
“The attack on bonus rates was something that may be a good principled stand in times of high interest. I hope that doing it right now, when rates are rock-bottom, won’t end up a triumph for theory over results.”
Whatever proves to be true in the future, the number of savings accounts on the market offering teaser rates is already falling fast.
Two years ago, there were 104 such deals on offer, including easy access deals, accounts for which notice must be given and variable rate Isas. This figure had almost halved a year later, and almost halved again over the last year — there are now just 33.
Rachel Springall, spokeswoman for Moneyfacts, says: “If bonuses do disappear this is likely to disappoint many who thrived on switching around their savings each year, but it will provide greater transparency overall.
“It’s the savers responsibility to switch to a better deal.
“Knowing whether this is the right move will really depend on whether providers raise the underlying rate so it matches the equivalent of when it had a bonus. If they don’t, it will cause uproar.”
Which? has further concerns about the levels of transparency surrounding teaser accounts. They include banks not providing names of accounts and interest rates on statements and online and how they notify people when the bonus ends. This could make it potentially difficult for people to compare the deal they are on with another one and switch.
Which? wants to see banks and building societies making things easier by giving savers clearer information, including better notification when a bonus rate ends or if better accounts are available.
Which? (www.which.co.uk) has some tips to help your savings go further.
Firstly, it may seem like an odd suggestion, but a current account could be the place for your savings.
TSB and Nationwide both offer current accounts with a 5% rate of interest, while Santander’s 123 current account has a rate of up to 3% plus cashback on bills.
Also, make sure you use your Isa allowance before the new tax year starts on April 6 as this money is ring-fenced from the taxman.
Which? suggests going online too, as it discovered seven of the 10 best-rate instant access accounts are available only on the internet.
Make sure you stay protected and try not to exceed the £85,000 limit in the UK for compensation if your bank or building society goes bust. This could mean spreading your savings out between different providers if you have over £85,000 in savings.
As the way we pay for things gets increasingly high-tech, several companies have launched systems that allow users to create ‘virtual’ wallets, by securely storing card details electronically.
Mobile wallets enable you do things with your phone that you’d be able to with a conventional wallet, such as making purchases, redeeming vouchers and using loyalty services.
The £1 coin is to be scrapped and replaced by a new high-tech version as it emerged that over 45 million fakes are now in circulation.
The proposed new £1 coin, which will have the same shape as the pre-decimalisation 12-sided ‘threepenny bit’, will be the hardest in the world for criminals to copy, the government said.
A public competition will also be held to to design the tails side of the coin, to be introduced from 2017 — as with all UK coins, the Queen’s image will be on the heads side.