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Savings bonuses hit by FLS

Savings bonuses hit by FLS

Category: Savings

Updated: 09/01/2013
First Published: 09/01/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In another fresh blow to the UK's savers, recent moneyfacts.co.uk research has uncovered a significant drop in both the number of savings accounts that include an introductory bonus as well as the average bonus rates on offer.

At the beginning of August 2012, there were 470 easy access savings accounts available, 73 of which offered introductory bonuses; however, by January 1 this had dropped by 54 products to 416, 46 of which include a bonus.

In the notice savings account sector, the number of products has dropped by 51 to 212 since August, with those offering a bonus decreasing from 23 to 11.

Significantly, the average easy access bonus has fallen by 0.33% to 1.02%, with the highest bonus rate on offer dropping 0.70% to 2.00%.

It is believed that the Government's Funding for Lending Scheme (FLS), launched in August last year, is to blame for the reducing demand for savers' deposits.

FLS is aimed at making cheaper funding available to banks and building societies so that they can lend more to consumers and small businesses.

Commenting on the findings, moneyfacts.co.uk's financial expert, Sylvia Waycot, said: "Providers no longer needing savers' money to prop up bank balances, thanks in part to the Government's Funding for Lending Scheme, have started streamlining their accounts.

"We now have less choice than we had four months ago, the rates are very much poorer and to add insult to injury, the introductory bonus has all but disappeared as banks shy away from attracting the attention of desperate savers.

"Every year brings new problems; last year we worried we might forget when the bonus ended on our account and this year we will be lucky to find an account that offers a bonus."

What Next?

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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