NatWest (LON:NWG) announced on Wednesday that it had launched a new savings account, for customers with little-to-no savings.
The account can be set up with an initial deposit of between £1 and £50, with a standing order for regular deposits thereafter. What has been grabbing headlines, though, is the account’s seemingly enticing 3% interest rate.
The issue is that this interest rate only applies while an account’s balance is under £1,000, and once your savings surpass that threshold, any sum over that amount are subject to an entirely underwhelming 0.01% interest rate.
NatWest said the new savings account would help consumers create a buffer zone during economic uncertainty, and said it would aid in their efforts to try and help an additional 2 million customers to save with them by 2023.
Speaking on the launch of the new account, Lewis Broadie, a savings expert at NatWest, said: “During lockdown many of our customers started to save for the first time. We are introducing the new digital regular saver to help our customers start and maintain a long-term savings habit which will help them to become more financially secure.”
The news also comes shortly after the popular NS&I Savings Account had its interest rate cut from 1% to 0.15%, while the return on income bonds is set to fall from 1.15% to 0.01%. These announcements prompted popular money-saving expert, Martin Lewis, to Tweet the following:
NEWS: NS&I announces unprecedentedly large rate cuts on 24 Nov. Currently best buy across the board.
-Income Bonds drop from 1.15% to 0.01%
-Direct Saver drop from 1% to 0.15%
-Investment account from 0.8 % to 0.01
ISA & Junior ISA similarA devastating blow for savers
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— Martin Lewis (@MartinSLewis) September 21, 2020
Unfortunately, it appears the new NatWest account is just another bit of attention-grabbing to get customers through the door, with the interest rate offered on anything-but-minimal savings being just as dismal as those offered by any other savings account or ISA in these difficult times.
However, being more positive, Bankrate UK Mortgage Expert, Nisha Vaidya, stated the following:
“This is a positive move from NatWest which recognises the financial challenges many people are facing in the context of COVID-19. Incentivising customers to save little and often is a good way of getting people into the savings habit at a time of deep economic uncertainty.”
“We know that young people in particular are facing real financial challenges right now – not just because they’ve been hit hardest by job losses, but because soaring property prices have priced many potential first time buyers out of the market.”
“While this account is aimed at customers with little or no savings, rather than those trying to grow their existing balances, it’s good to see banks innovate and launch new products that recognise the extraordinary financial circumstances many people are facing.”
Alas, if it were my money I’d probably just ignore the hype, or for someone looking for a beginners’ savings account: take a look at HSBC‘s (LON:HSBA) fixed term regular saver’s account, which offers 2.75% on savings up to £3,000.