Average ‘bonus’ rate expires in under nine months
The number of savings accounts using ‘bonus’ rates to attract new customers has increased by 30% since October 2007, according to new research from Investec Private Bank (‘Investec’).
Analysis of Investec’s latest Savings Index (the ‘Index’)1, reveals that of the 924 accounts reviewed, 151 feature a ‘bonus’ rate which expires on average in less than nine months.The Index, which analyses savings accounts for balances of £25,000 or more, shows that not only has the number of accounts reliant on ‘bonuses’ to boost their rates increased, but so too has the average ‘bonus’ size. Furthermore, the average lifespan of the bonus has shortened from 284 days in October 2007 to 265 days. As a consequence, says Investec, many savers will leave cash languishing in underperforming savings accounts once their initial ‘bonus’ rate has expired.
However, Investec says that savers do not need to rely on bonuses to ensure good rates of return. For instance, the Investec High 5 Account guarantees to always pay the average of the top five best-buy accounts as chosen and published by Moneyfacts.2
The following table outlines how the use of ‘bonus’ rates to attract savers has developed over the last six months for balances of £25,000: