Banks use penalties to 'trap' savers' cash
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 latest example is Nottingham Building Society’s new eSaver Plus, launched last week and paying a best-buy 1.71pc before tax.
The account includes a 1.21 percentage point introductory bonus until January 31 2015. However, if the account is closed at any stage before that date, the bonus is cancelled and savers earn just 0.5pc.
Savers also have to qualify for the bonus by keeping at least £5,000 in the account at all times. If the balance falls below this amount before February 1 2015, savers lose the entire bonus and the interest on the account will be just 0.5pc for the entire term.