Interest rates or customer service - which would you choose?
The historically low interest rates which borrowers have been enjoying for the last few years have proved disastrous to savers.This is especially true for those on fixed incomes who have seen the value of their cash whittled away as rates of inflation have exceeded interest rates paid by banks or building societies.
With any increase in base rate likely to be another couple of years away, according to recent forecasts, there has been little scope for financial institutions competing on price alone to attract savers.According to Anthony Thomson, the founder of the London based Metro Bank, only 9 per cent of people will move their savings for a better interest rate and most prefer good customer service and communication.
Is he right?“To some extent he may be,” says Kathryn Bamber, independent banking consultant with Astute Wealth Managementof Longridge. “Most people need their current account to be with a bank which they can rely on for good customer service, and basically doing what they need to do and when they need to do it.
"However for savings which people may not need to access regularly it is a different matter, and many people are prepared to put up with a lower standard of customer service to squeeze an extra margin on the interest rate."For example, whilst you may need online access for your current account, you may put up with just telephone or postal access for savings if you don’t need to get at them very often, if it means you earn more interest on your cash. "What savers really want though, is of course both of these, and the bank which ticks both of these boxes is where I want to put my money."