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There is a plague of bank accounts offering bonus interest rates to new customers for the first year, after which the rate plummets to less than 1%.
The apparent purpose is to win new customers and 'grow' the business, but 12 months later these customers disappear to find the next bigger, better deal at another bank. Doubtless a few will remain, those who are too busy or too weary for this fiasco or can't access comparison websites.
The High Street banking model seems calculated to maximise customer movement, they call it customer churn or attrition - although industry statistics show that acquiring a new customer costs 5 to 10 times more than retaining an existing one. The result is an illusion of productivity.
wasting our precious lives moving money...
The money that should be used to pay reasonable interest to customers is squandered on advertising campaigns, upgrading computer systems, opening and closing accounts, producing reports, employing financial advisors, composing and posting letters, much of which would be unnecessary if they retained their existing customers.
Strange how seldom the letters tell us how little interest we are getting! Meanwhile we customers are wasting our precious lives moving money around just to keep our heads above water.
Have they thought of an account with interest rates which start low but double annually to a maximum of 1% above base rate? I'll certainly deposit my money with a bank that gives this a try.
This comment which I heard recently is strongly stated, but essentially true: "Any idiot can make a fortune by charging 20% for borrowing and paying 0.0005% for deposits, yet they somehow think they are doing us a favour and that they are contributing to society. Well no they're not, they are just leeches in my opinion!"
By: C Nash