Time to move your savings

Husband and wife shock at a bill © iStock
Check your rate – you may get a shock

The Financial Conduct Authority (FCA) has named and shamed banks and building societies offering the lowest interest rates to customers. The financial watchdog last week published its second set of data showing the lowest rates offered by 32 providers of easy-access cash savings accounts and easy-access cash Isas.

The worst offenders included the Post Office, which was paying a 0% interest rate on some of its in-branch accounts. Danske Bank and Ulster Bank were also found to be offering easy-access cash savings accounts paying a dismal 0.01% a year. That means savers with £1,000 to invest are earning just 10p over the course of a year.

The regulator hopes that flagging up poor interest rates will inspire people to shop around to ensure they are getting the best deal on their accounts. By December 2016, firms will be required to provide customers with a summary box containing information about their accounts that is easy to understand, which should make it simpler to compare products. Firms will also need to remind customers about changes that will affect their money, such as a change in interest rates or the end of an introductory rate.

They will also have to make the account switching process quicker and easier, to help those who decide to take the plunge. The FCA has conducted trials with 130,000 consumers, investigating the best way of encouraging them to switch savings accounts. The trial found that customers were inspired to shop around after receiving digital reminders, such as texts or emails.

However, receiving a letter featuring a “switching box” containing account information, or a simple tear-off form and pre-paid envelope allowing them to change accounts easily, only stimulated switching within the same bank.

The FCA will now investigate alternative options, and report on its findings at the end of the year. That said, comparing interest rates on savings accounts isn’t difficult, so if you’re not sure whether you’re still getting a good rate, there’s little reason to wait until you’re prompted to switch.

Think twice before booking a term-time holiday

Taking your children on a trip during school holidays is expensive, as most parents know. In fact, it costs approximately 36% more for a family to go away the day after school ends for summer than it would a week beforehand, according to travel currency provider FairFX.

This adds so much onto the price of a holiday that some parents are willing to accept hefty fines instead. Those with children aged between five and 16 at an English state school face fines of up to £60 per child, per period of absence, for taking their children on holiday during term time (private schools are exempt).

If you don’t pay straight away, the cost rises: after 21 days, the fine doubles to £120. If you hold off for longer you can be taken to a magistrates’ court and, if found guilty, could end up with a criminal record and a fine of up to £2,500, court costs, or even a jail sentence of three months. That’s a big price to pay for a cheaper week on the beach.

These rules have been called into question since May, when a father on the Isle of Wight fought back against a fine after taking his daughter to Florida during term time. The High Court ruled in favour of the man, agreeing that his £120 fine should be waived as his daughter had a good “regular” attendance record overall. In the following months, some local education authorities have said they will hold off issuing fines until they get more guidance from the Department of Education.

However, officially the rules still stand, and any waived fines for unauthorised absences during this period could be issued at a later date. So if you’re thinking of taking your children out of school during term time, expect to have to pay.