❓ Ask Anna: Watch out for the ‘Issues’

Author: Anna Bowes
15th March 2019

Question: "I noticed that my savings provider had increased the interest rate on offer on an account that I hold. I assumed that I would automatically get that rate, particularly as the info on this account states interest rates are variable and can increase and decrease.

I noticed my rate had not changed so I contacted the bank and they advised that to get the higher rate I had to open a new account and transfer the funds. Why is this?"

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Many providers launch savings accounts with the same name – but with different issue numbers – which can make it tricky to know exactly what rate of interest applies to you. The rate paid depends on when you opened your account and therefore which issue number you hold.

This is so that the banks and building societies can attract new business when required by offering eye-catching rates - but not necessarily having to pay that rate across the board.

At the moment, out of the top 10 easy access options available, only two are simple savings accounts that pay the same rate to all customers – new and existing.

These are RCI Bank Freedom Savings Account* (which has just obtained its UK banking licence) and Ford Money Flexible Saver – both of which are paying 1.42% AER.

Most of the accounts that have a number of different issues will at least make it clear which issue you have in the account name – for example Virgin Money’s Double Take E-Saver Issue 10. This account is the current issue available and is paying 1.50% AER. Whereas Issue 3, which was available between 15 December 2017 and 22 February 2018, is paying a lower rate of 1.26% AER.

However, there are others that don’t make it so obvious. Tesco Bank’s Internet Saver does not have issue numbers as such, however the rate earned depends on when you opened the account – so the way to check the interest rate that applies to your account is to log into it.

At the moment, anyone who opens a Tesco Internet Saver will earn 1.42% AER. But if you opened an account between 3 May 2018 and 30 May 2018, you would currently be earning a far lower rate of 1.12% AER. To add to the problem, the Internet Saver also has an introductory bonus that will drop away after 12 months, which makes it even more important to keep an eye on the rate that actually applies to you.

With easy access accounts it can be pretty simple to open the latest issue and transfer your cash from the old account to the new, but the impetus is on the saver to realise and to do this – not the provider.

As a result, some may prefer an account like those available from RCI and Ford, which pay the same rate to all customers – so the rate you see advertised, is the rate you will be earning.

It’s not quite as simple if you have a notice account because if you want to switch to the current issue, even though the funds are to remain with the same provider, you still have to give the required notice and wait until the notice period is over before you can transfer the funds.  And if you want to make sure that the better rate is still available, that may mean opening a new account and funding it with the minimum amount required, which could be £1,000 or even more, whilst you wait for the notice period to elapse.

Making sure that you earn as much interest as possible on your savings can be a tricky business at times because of ‘issues’ like this and other complicating factors.

However, Savings Champion is here to cut through the complication and help you to make the most of your savings.

If you need any help with any aspect of savings or to talk through the options available, drop us a line at [email protected] or call one of our experts on 0800 011 9705.

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