07/09/2003

- When all that glitters is not 'gold' - Egg/MORI research reveals misleading savings account names
- Almost two thirds (58%) erroneously thought accounts with 'gold' in name paid best savings rate
- The 8 'gold' instant access savings accounts actually pay average rate of 0.4% gross p.a/AER

“Our research shows that UK banks - by turning gold into base metal - seem to be engaging in a rather peculiar kind of reverse alchemy when it comes to naming savings accounts. It seems that going for gold is, after all, not the way for consumers to secure their financial futures.” .”
Mark Nancarrow, CEO Egg UK

7th September 2003
What’s in a name? Quite a bit it seems when it comes to consumers’ perception of some savings accounts and the rates of interest they pay, according to new research by Egg, the world’s largest pure online bank.

The Oxford English Dictionary defines gold as pertaining to “money in large sums” and “wealth”. So consumers might well be excused for thinking that savings accounts which contain a reference to a precious metal in their name - such as Halifax’s Liquid ‘Gold’ account - will pay a superior rate of interest to accounts which are more blandly named.

However, Egg’s analysis of the rates paid on the 8 ‘gold’ instant access savings accounts listed in Moneyfacts paint a rather different picture. Egg found that these accounts pay an average interest rate of just 0.4% gross p.a/AER on balances of £2,500 - or almost 10 times less than Egg’s Internet Saving Account rate.

Assuming interest rates remain the same, a higher rate tax payer saving at this rate would see their £2,500 grow by a paltry £61 after tax over 10 years.

Egg also commissioned MORI to investigate whether consumers would be misled by the names of these account. Egg asked MORI to show 1,000 consumers three accounts from 5 separate providers – each including one account with ‘gold’ in the name.

Based purely upon the names, MORI asked the respondent to decide which account they thought would pay the best rate of interest. Two thirds (58%) assumed that accounts which refer to ‘gold’ in their name paid the best rates of interest. Surprisingly, less than 1 in 5 (18%) correctly guessed the best paying account.

Mark Nancarrow, CEO Egg UK comments:

"Consumers need to be wary of the sort of gimmicks employed by banks to lure them into accounts - with, for instance, upfront short-lived bonuses or fancy names which then often fail to sparkle. When deciding where to save money it is important that consumers scratch below the surface, ensuring that the account not only gives good value now, but also promises good value long term."

Provided by Egg