Banks use penalties to ‘trap’ savers’ cash

Tuesday, November 26, 2013
By Paul Martin

By preventing customers from making withdrawals, banks can free up more cash to lend out at a profit

By Dan Hyde
26 Nov 2013

Banks are putting onerous restrictions on “easy access” savings accounts to stop savers withdrawing money, The Telegraph understands.

A senior banker said such ploys were purposeful attempts to limit “churning” – the flow of deposits and withdrawals – on each account.

If a bank can prove that savers withdraw cash very infrequently, the company can afford to keep less capital in reserve. That enables it to direct more of savers’ money to its more lucrative lending arms.

Many savers have turned to easy access accounts because the rates on fixed-term deals have fallen to such lows. The best easy access rate pays 1.71pc, while the best five-year fixed rate is 3.15pc.

However, this trend has bred a collection of savings accounts that fail to live up to the “easy access” billing, as banks try to secure funds.

The Rest…HERE

Comments are closed.

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter