tarnished gold coinsBen Birchall/PA Archive/Press Association Images

Pensioners are being ripped off by so-called 'gold' savings accounts, which have rapidly lost their lustre. Governor Money researchers discovered that those accounts aimed at the over-50s paid an average interest rate of 2.23% - compared to those aimed at a broad spectrum of savers which paid an average of 3.17%.

So why are older people getting ripped off?

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Poor returns

The researchers looked at the full spectrum of savings accounts - excluding ISAs. They examined the top 20 accounts in each category and calculated that someone putting £5,000 into an account aimed at the over 50s would get an average of £111.50 in interest before tax. This compares to £158.50 they would get in the average normal account.

The best over-50s variable product currently pays 2.8%, compared to a market leading 3.75%. This kind of shortfall would be disappointing at any time, but with rates so low overall, it's even more detrimental to a group of people who often live partly off interest on their savings.

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Need to know: Savings



Miles Bingham, chief executive of Governor Money, warned "Labelling products as exclusive for the over-50s usually implies they come with some benefit or additional value which is not available to the public at large. Our research demonstrates that this is clearly not the case when it comes to savings. Older savers should treat such products with a high degree of caution and not limit their options."

So why is this happening?

There are two things at work here. The first is that, as Bingham says: "There isn't a great deal of choice in this section of the market. By only looking at over-50s products, savers would be ignoring over 93% of the market." It means that accounts don't have to be so competitive in order to be the best in this particular corner of the market - and therefore companies don't have to be so generous with rates.

The second is that they are relying on retirees to be loyal - to put their money in an account and leave it there. Traditionally this group will tend to stick with what they know. It means that a reasonably generous rate can be offered, and then simply reduced over time: older savers will simply stay put.

It is therefore worth confounding the expectations of the marketeers. There is nothing to be gained from these accounts, so it's worth giving them a wide berth, and doing a regular and comprehensive search of the market to ensure you are getting the best possible return.

10 things we hate about our banks

  • 1. PPI
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    1. PPI
  • 2. Mortgages
    <p> Complaints about mortgages jumped by 38% in the last six months of last year, the FOS figures show, compared to an increase of just 5% in investment-related complaints.</p> <p> Common gripes about mortgages include the exit penalties imposed should you want to sell up or change you mortgage before a fixed or discounted deal comes to an end, and the high arrangement fees charged by many lenders.</p> <div> </div>
    2. Mortgages
  • 3. Savings rates
    <p> While there is nothing in the data released by the FOS about the number of complaints relating to savings accounts, hard-pressed savers have been struggling with low interest rates for several years now.</p> <p> You can get up to 3.10% with Santander's easy-access eSaver account, but many older accounts are paying 1.00% or less and even this market-leading offer includes a 12-month bonus of 2.60% - meaning that the rate will plummet to just 0.50% after the first year.</p>
    3. Savings rates
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    <p> Banks are imposing the highest authorised overdraft interest rates since records began, with today's borrowers paying an average of 19.47%, according to the Bank of England.</p> <p> A typical Briton with an overdraft of &pound;1,000 is therefore forking out around &pound;200 in interest charges alone. Coupled with meagre returns on savings, it's enough to make your blood boil!</p>
    4. Borrowing rates
  • 5. Penalty charges
    <p style="text-align: left;"> While authorised overdrafts may seem expensive, going into the red without permission will cost you even more due to huge penalty fees.</p> <p style="text-align: left;"> Barclays, for example, charges &pound;8 (up to a maximum of &pound;40 a day) each time that there is not enough money in your account to cover a payment.</p>
    5. Penalty charges
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    <p> If you need to send money abroad, the likelihood is that your bank will impose transfer charges - and offer you a poor rate of exchange. Someone transferring a five-figure sum could easily lose out by &pound;500 or more as a result.</p> <p> The good news, however, is that you can often get a better deal by using a currency specialist such as Moneycorp.</p>
    6. International transfer charges
  • 7. Waiting on the phone
    <p> <span style="text-align: left; ">Automated telephone banking systems, not to mention call centres in far-flung parts of the world, are one of our top gripes - especially as we often encounter them when we are already calling to report a problem.</span></p> <p> In the words of one disgruntled customer: &quot;What is it about telephone banking that turns me into Victor Meldrew? Well, maybe it's the fourteen security questions, maybe it's the range of products that they try to push or maybe it's because I'm forced to listen to jazz funk at full volume while my phone bill soars.</p> <div> </div> <div> &quot;Actually though, I think it's because the people I eventually speak to rarely seem able to solve the issue I'm calling about.&quot;</div>
    7. Waiting on the phone
  • 8. Being treated like a number
    <p> The days of a personal relationship with your bank manager are long gone - for the huge majority of us at least.</p> <p> When ethical Triodos Bank investigated recently why around 9 million Britons would not recommend their banks to a friend or relative, it found that almost a third felt they were not treated as individuals. Another 40%, meanwhile, were simply disappointed with the customer service they received.</p> <div> </div>
    8. Being treated like a number
  • 9. Long queues in branches
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    9. Long queues in branches
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    <p> The Triodos Bank research also indicated that the bonus culture that ensured the bank's high-flying employees received large salaries, even when it was making a loss at the taxpayer's expense, was hugely unpopular with consumers.</p> <p> About a quarter of those who would not recommend their current banks said this was the main reason why. And with RBS executives sharing a &pound;785 million bonus pool despite the bank, which is 82% publicly owned, making a loss of &pound;2 billion last year, it's not hard to see why.</p>
    10. Bankers' bonuses


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