Loyalty schemes have become ever more popular since shops and supermarkets started offering two-tier pricing where members pay less on certain items.
Now the loyalty pricing trend is spreading to savings accounts.
Providers have been bringing out an increasing number of accounts with a ‘loyalty’ or ‘exclusive’ sticker. The idea is to reward long-standing customers, for example by paying higher savings rates if you also hold your current account with the provider.
I have no objection to this – there’s nothing wrong with rewarding loyalty. But, as always, the big question is are they really worth it or is it all smoke and mirrors?
Disappointingly, the answer is they are generally not worth it. You are still likely to find better rates by shifting your money elsewhere.
Most ‘loyalty’ or ‘exclusive’ accounts are generally not worth it, as you are likely to find better rates by shifting your money elsewhere
Often, the extra interest you earn as a loyal customer is small change – enough to buy you a couple of cups of coffee a year.
I’ve run the rule over the whole savings market and it does appear to be a marketing trick in most cases. And one that is easy to get caught up in as it looks as if you are being offered a special deal. For example, take the Halifax easy-access Reward Bonus Saver, which is only open to some of its current account holders. It pays 3.8 pc if you restrict the number of withdrawals you make in the year to a maximum of three.
Your ‘reward’ is minimal compared with the 3.7 pc paid on its Bonus Saver, the same account which is open to all. The 0.1 percentage point loyalty boost gives you just £10 extra interest a year on each £10,000 you save.
Not much to write home about, is it? And you only get the extra interest for one year – after than you are dumped into its Instant Saver where the rate is as low as 1.45 pc.
It also pays that extra 0.1 point to some current account holders in its one or two-year fixed-rate bonds or Isas.
Lloyds Bank offers similar miserly ‘rewards’ to its Club Lloyds current account holders.
Barclays offers extra interest on its 18-month fixed-rate bonds and Isas. But it pays 3.8 pc for its Premier customers, just 0.05 points above the 3.75 pc available to all.
That gives you an extra £5 a year for your loyalty on every £10,000 saved.
Kent Reliance’s new, exclusive two-year bond pays 4.61 pc to some savers who are already with the bank, just 0.05 percentage points over its normal 4.56 pc rate.
Building societies are in on the act too. Scottish BS pays 4.25 pc on its one-year Members Bond for those who have been with the society for at least a year. Newcomers earn just below at 4.2 pc.
There are a few hidden gems that are more generous and worth it.
Skipton has a one-year Save More Member Bond which pays a competitive 4.6 pc for members who joined the society before October 14.
It’s a generous 0.9 percentage points over its normal one-year bond at 3.7 pc – a 24 pc uplift, giving you an extra £90 on each £10,000. The catch is that you can’t transfer savings you already have with the society into this new account – it has to come from elsewhere.
Virgin Money also has exclusives for its current account holders with 4.61 pc on its one-year fixed rates cash Isa, 0.5 points over its usual 4.11 pc offer.
Its Easy Access Cash Isa pays 4.51 pc, a decent rate for this type of flexible Isa where you can put money in and take it out as many times as you like each year. You can only open one cash Isa each tax year with Virgin Money.
sy.morris@dailymail.co.uk
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