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If you take a look at our savings Best Buys, you'll probably see a few accounts with issue numbers next to them. Once that particular issue has been withdrawn from sale, it becomes a "closed account" – it doesn't accept any new customers, but those already saving into it can continue to do so. Given how quickly some accounts are withdrawn and re-issued, there are huge numbers of closed accounts out there, with the figure completely dwarfing the number of live accounts available.
Our latest research has highlighted this very phenomenon. The rise in the number of closed variable savings accounts has accelerated over the last two years, so much so that for every live account on the market today, there are four closed accounts. The gap between live and closed accounts is widening, too, as the table below shows:
|Number of Closed Variable Accounts||1,040||1,194||1,398|
|Number of Live Variable Accounts||217||240||355|
|Source: Moneyfacts Closed Savings Market Intelligence Report|
But if you're still with one of these closed accounts, are you getting a poor rate? This is often assumed to be the case, but surprisingly, it could be entirely the opposite. Indeed, the average variable rate for live products stands at 0.39%, which pales in comparison to the average 0.73% for closed savings accounts. Not only that, but only 29% of closed savings accounts pay 0.25% or less, a far smaller percentage than live accounts (50%), so savers could actually be getting a far better deal.
However, as Charlotte points out, that doesn't mean you should rest on your laurels: "Savers sitting in closed accounts that pay next to nothing will no doubt be better off if they shop around. While their account may look attractive one month, rates can be slowly whittled down, so unless savers are actively monitoring it, they can find that the interest paid on their account is significantly less than they had hoped."
Not only that, but confusion over multiple issues of the same account can lead to some savers believing they are on a better rate than they are, making it even more important to be vigilant! "The savings market is a minefield already without having to battle through thousands of products not open to new customers," concluded Charlotte. "Savers with closed accounts will need to be at the top of their game to ensure they get the best possible return on their savings."
If you're in a closed account, make sure to check the rate on a regular basis so you know exactly what you're getting. If it isn't a good deal, compare alternatives and switch!
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