P2P Money Blog

RateSetter have declared war on zombies.  Not the undead, you may be pleased to read, but the type that are all too common these days.  The type that you may well have yourself.  It started life as something decent, something you were glad to have, but over time it has turned ... into a zombie.

These are savings account that are now shut to new business, and typically the interest rate has fallen to next to nothing.  With inflation still significantly greater than the Bank of England base rate, savers are effectively loosing money in these accounts as the fund's purchasing power continues to erode.  If inflation is 2.5% higher than your savings rate, then after 5 years your money will have lost a tenth of its value, and after a decade it will have lost just under a quarter of its value.  Savers have never had it so bad for so long.

RateSetter is suggesting that savers should become "lenders", and with rates up to around 5.5% AER on 5 year loans (rates before tax, but after other deductions), lenders will keep ahead of inflation, even after higher rate tax.  RateSetter is also the only established peer-to-peer provider where every lender have received every penny of capital back.

Here is the press release from RateSetter:

Britons are in the dark when it comes to their savings accounts, and are at the risk of falling victim to so-called “zombie” accounts, new research released today reveals.

Peer-to-peer lender RateSetter commissioned the independent study, which found that 79% of Britons admit to not checking their savings returns against inflation, whilst over half - 52% - don’t know what return their savings account is currently giving them.  

Shockingly, a terrifying 80% of all savings products in Britain are reported as zombie accounts, so-called because of their lifeless returns and that they are shut to new customers. Their rates can fall as low as 0.05% - earning a pitiful 50p a year on savings of £1,000, highlighting the potentially negative impact that not keeping on top of savings can have.

As 63% of Brits revealed that they are prioritising sorting out their finances as a New Year’s resolution, RateSetter set zombies loose in the City of London in an effort to both wake people up to the effects of zombie accounts and shock them into saving their savings.

The zombies caused quite a stir as they terrorised commuters at financial institutions including the Bank of England and the Royal Exchange, and transport hub Liverpool Street Station.

Rhydian Lewis, RateSetter Founder and CEO, said: “Zombie accounts are doing hard-working savers a real injustice. We want to help the public realise this problem and show them that there is a positive alternative to savings accounts, which will give them a fantastic return on investment. Given the economic climate, it’s never been more important to make the most out of our hard-earned money, so we hope our zombies will shock people with ‘infected’ accounts into action!”

RateSetter is a modern finance company, which offers 3.2% on its 1 year bond product. To find out more visit www.RateSetter.com.