Top 5 Methods to Reduce Savings Rates

According to the report published by The Times, most of UK savers are losing money as banks and building societies are not only paying extremely low savings rates, but also use a number of methods to reduce them.
The latest research carried out by an online financial comparison website, Moneynet, showed that most savers lose their money rather than make profit as the rate of inflation in the UK is 1.5% and the vast majority of savings accounts (almost 90%) pay less than 2.5%. In addition to these 2 factors contributing to low returns of UK savers, banks and building societies are constantly inventing new ways to further reduce and recalculate interest. The Times outlined 5 major methods used by banks and other savings providers to cut savings.
The first one is re-tiering. The vast majority of savings accounts feature pay rates that are based on the amount of saver’s deposit; that is why many banks and building societies add new tiers that can alter savers’ pay rates. In the past year such savings providers as NatWest, Abbey, HSBC, and Nationwide re-tiered their savings deals, causing savers to lose money.
The second method is changing of terms. Some UK savings providers choose to change the terms on which savers are granted access to their accounts; oftentimes, conditions are changed in such a manner that savings deals are no longer subject to the Payment Services Directive of the European Union and, thus, become less customer-friendly.
The third way of fooling savers is manipulation best buys. Many comparison sources base their calculations on a particular tier, which can oftentimes lead to savers losing money.
A large number of UK banks and building societies introduced so-called bonus rates, in an effort to make up the 4th way to cheat savers and to secure higher positions in best buy comparison tables. The terms on bonus rates are, however, easily changed by savings providers without notifying the customer.
And, finally, the last but not the least effective way banks and building societies “save on savings” is direct rate cuts. As many as 8 savings providers reduced their pay rates in the past year; they include Bank of Scotland, Clydesdale Bank, Halifax, Leeds building society, Intelligent Finance, National Counties, Marsden building society, and Yorkshire Bank.