Millions of savings account holders may be unaware of the low interest rates they are earning due to a complex system of account "issues," according to financial experts. Latest figures from broker Hargreaves Lansdown suggest that a third of savers have no idea what interest their money is generating.
The average interest rate on easy-access savings accounts currently on sale or closed to new savers stands at a mere 1.6 percent. However, some banks have created hundreds of different versions, or "issues," of the same savings account, leading to vast discrepancies in the rates offered.
For example, Cynergy Bank's Online Easy Access Account, on its 101st issue, offers a rate of 4.15 percent, which includes a two-percentage-point bonus for the first year. In contrast, customers holding earlier issues, from 1 to 82, may be earning as little as 0.75 percent. Other older issues for the same account pay between 1.6 percent and 1.9 percent, while the 100th issue offers 4.55 percent with a one-year bonus. This "issue-number trick" is designed to obscure the actual earnings for customers.
Post Office Online Saver, on its 89th issue, offers 4.31 percent, including a 12-month bonus. However, customers in issues 1 to 80 receive only 0.9 percent. Similarly, Charter Savings Bank's Easy Access Issue 78 pays 4.21 percent, while some older versions of the account offer 3.15 percent.
This practice also affects cash Isas. The Post Office Online Isa Easy Access, on its 52nd issue, provides 4.16 percent, including a 3.26-point bonus for 12 months. Customers in issues 1 to 47, however, are earning just 0.9 percent. Charter Savings Bank's 82nd issue Cash Isa offers 4.26 percent, but older issues yield as little as 3.1 percent.
With inflation running at 2.9 percent, savers earning less than this rate are experiencing a decline in the real value of their money. Experts emphasize that headline rates are often used to attract new customers, while loyal savers are frequently offered significantly lower rates. Many top-paying accounts also include bonuses that expire after a year, causing rates to drop substantially once the introductory period ends. Tesco Instant Access Cash Isa, for instance, pays 4.2 percent, but 3.15 percentage points of this is a one-year bonus.
Savers are advised to look beyond the advertised headline rate, check their account's issue number, and verify the exact interest rate they are currently earning to avoid being a victim of these tactics.