BBA says current accounts not designed to be used for savings

Posted on October 12th, 2010 | Categories - Savings

People should put their money in a savings account to generate a more attractive return instead of keeping it in a current account, the British Bankers’ Association (BBA) has urged.

The association was responding to research by Moneyfacts, which showed that current account interest rates have dropped considerably with over half of the accounts available to consumers paying out no interest at all.

A BBA representative said: “Current accounts are not, and never have been, intended for people’s savings although many accounts do attract a small amount of interest. They are exactly what they claim to be, an account from which everyday transactions – such as direct debits and ATM withdrawals – are managed”.

The Moneyfacts study showed that almost 30% of current accounts pay 0.10%. A spokesman said: “The loss of interest at 0.10% is likely to make little difference to each individual customer, but for the banks it will be a significant cost saving. Most people bank with one of the big banks, so it is highly likely the majority of people are receiving no interest on the money in their current account”.

The BBA said: “Banks offer a wide variety of savings products where interest is paid and people should shop around for the account which suits them best”.

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