Check Savings Account Bonus Rates Small Print
Published: 16 November 2010 By MoneyHighStreet Staff Leave a Comment
With interest rates low, getting a savings account with a good interest rate is sought by many but with bonus rates making good headline figures it’s important to check the small print.
As Julie Smith, head of savings at Fair Investment Company, warns “if you are considering a savings account paying a bonus rate (and the bonus should apply for at least six months) make sure you know what the rate is after the bonus- you might be in for a shock.”
And she adds “Instant access savings accounts and cash ISAs regularly offer an introductory bonus rate of interest for opening an account; this can be as much as 80 per cent of the overall rate on offer.”
An important point to be aware of is that whilst in most cases, once the interest rate drops, your bank or building society will write to you, this is not always the case.
Payment accounts, which include some flexible savings accounts and current accounts are governed by EU wide regulations and you will be notifed 2 months in advance of any changes.
Non-payment accounts are covered by FSA (Financial Service Authority) rules and as such you will only be personally notified where the change is considered to be of a ‘material nature’.
The term ‘material nature’ is defined as he rate falling in one go by more than 0.25 per cent and where the account balance is £500 or more, or if the rate falls by 0.50 per cent over the course of 12 months.
As a rule, higher and consistent interest rates are available on fixed terms savings which mean you need to lock your money away for a defined period.
Even with these though you do need to make sure you are aware of the terms and conditions and in particular know what happens to your money at the end of the period – it could be rolled over into another fixed term account at a different rate or into a current account paying little or no interest.
Julie Smith advises “whatever type of savings account you are looking for – from fixed rate bonds to cash ISAs – it is vital you check all of the small print before you apply.”
