Got an over 50s savings account? You could be getting scammed
We over 50s tend to be pretty savvy about life in general – after all, we’ve got loads of experience of life’s ups and downs. We can also be a pretty effective lobby group. We vote. We (should) pay attention to their finances. And we can kick up a stink when pushed – witness the way we managed to turn a perfectly innocent and understandable budget fiddle – the freezing of the already very high income-tax allowance for pensioners – into the ‘granny tax’ scandal, while their government of 30- and 40-somethings stood by helplessly
So WHY do we tolerate the treatment we often get at the hands of our high-street banks?
The ‘over 50s savings accounts’ phenomenon is one in long list of tricks and marketing ploys used by banks and building societies to drum up business. Millions of savers feel that they will get a better deal with an account for which they must first ‘qualify.’ The savings industry has been drawing people in by making savers feel they have met certain standards of eligibility, with the unspoken promise that this makes them eligible for better deals
But a study carried out by investment advisors Governor Money, has found that this is not always the case, and that older savers would be better off sticking to the same products as everyone else. Their research found that the top 20 over 50s accounts paid an average annual interest rate of 2.23 per cent, while the top 20 accounts overall pay an average of 3.17 per cent to holders of any age
Put into perspective, this means that over one year, £5000 would make £111.50 in a senior savers account and £158.50 in an account aimed at everyone. The survey fuels fears that some banks and building societies are looking to take advantage of the over 50s age group. This group controls more than 70 per cent of the country’s cash savings
Currently 22 different providers are offering 43 different accounts specifically aimed at over 50s
One of the worst culprits is the West Bromwich Building Society which pays only 0.05 per cent before tax on its ‘Oak Account’, which is available to those aged 60 and above. Another poor example is the Yorkshire Building Society. Its ‘Access Saver for Pensioners’ account pays 0.25 per cent before tax to anyone who is receiving a pension
Miles Bingham, chief executive of Governor Money, said: ‘Labelling products as exclusive for the over-50s usually implies they come with some benefit or additional value which is not available to the public at large. Our research demonstrates that this is clearly not the case when it comes to savings. Older savers should treat such products with a high degree of caution and not limit their options’
The study comes at a crippling time for savers who have been hit for more than three years by the Bank of England’s decision to cut the base rate to the lowest level in history
Over 50s are advised to exercise caution and look at all available options when making a decision about where to place their savings. The problem with this is that it not only takes time to do the research, but it’s a pain to keep track of when all those ‘special’ introductory offers run out and even more of a pain to switch bank accounts. Banks know that huge profits can be generated through client inertia. They rely on the fact we put our money into a savings account but don’t move it when the rate falls to near zero because of the hassle
But never fear, help is on the way, from……Governor Money, in the form of a completely enw type of account. Cynics may say that the only reason Grosvenor did the research was as part of a campaign on their part to draw your attention to their services and that we should therefore ignore them. But on this occasion it’s appropriate to put our natural cynicism aside
When you sign up, you get a single account with Governor and a single log-in. Within that account, you’ll be able to deposit, monitor and transfer your cash around many different bank accounts with no extra administration. You get alerts when fixed-rate deals come to an end (so you remember to log in and move your money on). The account handles savings accounts and, a real bonus, cash ISAs. They send you alerts when your deals are about to mature. Even better, the account is entirely free. You need to have an existing bank account to sign up, but, because of this, signing up is incredibly easy and takes less than 10 minutes. Find out more here
It hasn’t managed to sign the big banks up (they’ve no reason to help you conquer the consequences of apathy) so you don’t always get the highest rates – although the best two-year fix on offer right now is still 3.75%. But the system means you won’t end up with the worst rates. That’s likely to be more than any one with a silver saver account can say!