Savers should look at alternative accounts, says expert

People who have a lot of money tied up in savings accounts may not be getting the best interest rates and should look at alternative options, a financial expert has said.

Kevin Mountford, head of savings and current accounts at Moneysupermarket.com, said that although there are a lot of good deals available at the moment, many people are probably “not getting their just returns” on their savings.

Mr Mountford warned that consumers often forget that “with most tax payers that rate of interest is subject to tax at either a standard or higher rate so the net return they are getting often is even less than the RPI at the moment”.

According to the Telegraph, many savings accounts have interest rates of around seven per cent, even thought the Bank of England base rate is five per cent.

The newspaper says that the credit crunch is largely responsible for banks being more cautious with their money and seeking alternative sources of funding through higher rates on savings accounts, which give them a ready supply of cash.

Mr Mountford warned that consumers often forget that “with most tax payers that rate of interest is subject to tax at either a standard or higher rate so the net return they are getting often is even less than the retail prices index at the moment”.

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Halifax sets up dormant accounts service

Halifax announced today that it will be reuniting customers with money held in lost or forgotten-about bank accounts.

It is estimated that a total of £44 million is being held in so-called ‘dormant’ accounts.

Around 20,000 of its customers will be written to, with the savings bank estimating that these customers hold around £40 million of the total.

Halifax have also set up a website, halifaxlocateaccounts.co.uk, where customers can fill in and submit an online enquiry form to find out about dormant accounts that might be retrieved.

Mike Regnier, head of savings at Halifax, said that “the response to our campaign to reunite customers with their funds has been very encouraging, and we believe these next steps in the process will help more customers track down their money”.

An advertising campaign is scheduled to run in the press next week, to raise public awareness of the scheme by acting as a ‘memory-jogger’ for customers.

The bank is currently the only one in the UK to carry a dormant accounts reunification service.

Tags: head of savings, forgotten-about bank accounts.It, enquiry, dormant accounts, reunification