Loyalty programs have become increasingly popular since stores and supermarkets started offering double pricing, with members paying less for certain items.
Now the trend of loyalty prizes is spreading to savings accounts.
Providers are increasingly releasing accounts with a ‘loyalty’ or ‘exclusive’ sticker. The idea is to reward existing customers, for example by paying a higher savings interest rate if you also have a checking account with the provider.
I have no objection to this; there is nothing wrong with rewarding loyalty. But as always, the big question is: are they really worth it or is it all smoke and mirrors?
The answer is disappointing: they’re generally not worth it. You’ll probably still find better rates by shifting your money elsewhere.
Most “loyalty” or “exclusive” accounts generally aren’t worth it, as you’ll likely find better rates if you move your money elsewhere
Often the extra interest you earn as a loyal customer is change – enough to buy you a few cups of coffee per year.
I’ve applied the rule across the savings market and in most cases it seems to be a marketing ploy. And one that’s easy to get caught up in, because it seems like you’re being offered a special deal. Take, for example, Halifax’s easily accessible Reward Bonus Saver, which is only accessible to some of its current account holders. It pays 3.8 pc. if you limit the number of withdrawals per year to a maximum of three.
Your ‘reward’ is minimal compared to the 3.7 pct. which is paid into the Bonus Saver, the same account that is accessible to everyone. The 0.1 percentage point loyalty boost only gives you €10 extra interest per year for every €10,000 you save.
Not much to write home about, right? And you only get the extra interest for one year – then you’re dumped into the Instant Saver, where the interest rate is just 1.45pc. amounts to.
It also pays that extra 0.1 point to some current account holders in its one- or two-year fixed rate bonds or Isas.
Lloyds Bank offers similarly stingy ‘rewards’ to its Club Lloyds current account holders.
Barclays is offering extra interest on its 18-month fixed rate bonds and Isas. But it pays 3.8pc. for its Premier customers, just 0.05 points more than the 3.75 pct. which is available to everyone.
That gives you €5 extra per year for your loyalty for every €10,000 you save.
Kent Reliance’s new exclusive two-year bond pays 4.61pc. to some savers who already work at the bank, only 0.05 percentage point above the normal interest rate of 4.56 pct.
Construction associations also participate. Scottish BS pays 4.25pc. on its one-year Members Bond for those who have been with the association for at least a year. Newcomers earn slightly less, namely 4.2 pc.
There are a few hidden gems that are more generous and worth it.
Skipton has a one-year Save More Member Bond that has a competitive 4.6pc. pays out to members who joined the association before October 14.
It is a generous 0.9 percentage points compared to the normal one-year bond of 3.7pc. – a 24pc increase, giving you an extra £90 on every £10,000. The catch is that you cannot transfer the savings you already have with the company to this new account; it must come from somewhere else.
Virgin Money also has exclusivities for its current account holders with 4.61pc. on its one-year fixed rate Isa, 0.5 percentage points above the usual offer of 4.11pc.
Its Easy Access Cash Isa pays 4.51pc, a decent rate for this kind of flexible Isa, where you can take money in and out as often as you like each year. You can only open one cash Isa with Virgin Money each tax year.
sy.morris@dailymail.co.uk