Nationwide calls on industry to play fair by savers

Nationwide Building Society is calling on the industry to play fair by savers and inform them when introductory deals are coming to an end. To ensure that savers are not caught out by high headline rates which last for a limited period, the Society would like to see the Banking Code incorporate guidance that makes it compulsory for subscribing banks to inform consumers about the end of such deals.

In an attempt to lure people in, many savings providers offer high headline rates which only last for a limited period. These introductory deals often last for between six and 12 months and typically offer anything up to 1% more than the ongoing rate of interest which comes into effect when the special offer expires. While such accounts might suit savers in the short-term, at the end of the introductory offer many people will either forget or simply be unaware that their hard earned money no longer benefits from the headline rate.

The following accounts all have introductory rates:

Abbey e-Saver: 0.50% bonus for 12 months
Abbey Direct ISA: 0.50% bonus until 1/5/08
Abbey 50+Saver: 0.50% bonus until 1/10/08
Alliance & Leicester Direct ISA: 0.40% bonus until 31/08/08
Bradford & Bingley e-Savings: 0.51% bonus for 12 months
Britannia Easy Saver: 1% bonus for first three months
Cheltenham & Gloucester Reserve: 0.85% bonus for first six months
First Direct Mini Cash e-ISA: rate guaranteed to pay 5.60% until 01/03/08
ING Direct ISA: rate guaranteed to pay 6.55% for first six months then drops to 5.13%
Lloyds TSB Online Saver: 0.60% bonus for six months
Northern Rock Tracker Online: 0.71% bonus for six months
Tesco Savings: 1% bonus for six months

Matthew Carter, Nationwide’s savings director, said: “Introductory deals offering high headline rates for a limited period of time are now commonplace within the savings market. On the face of it, these rates may look very attractive to savers looking for a good return on their money but beneath the surface they are often little more than a smokescreen hiding an account paying a lower rate of interest.

“A few weeks prior to an introductory deal coming to an end, savers should be told by their provider when they can expect to see a change in their interest rate, as well as details of the new rate they will receive going forward. Nationwide would like to see this incorporated in the Banking Code and become mandatory practice across the industry - injecting transparency and ensuring savers are given all the information they need to make the right decisions regarding their savings.”

Savers who are looking for long-term good value rather than a quick fix should look to accounts which offer an excellent rate beyond the introductory deal. Nationwide’s eSavings and Regular Savings accounts both offer competitive rates of interest of 5.80% and up to 6.75% AER respectively and are not restricted to a limited period. Furthermore, Nationwide’s Regular Savings account guarantees to track changes in the Bank of England Base Rate until 1 January 2010.