"RE Savings account with less than £200"
A review of Lloyds TSB Bank by Alex Walker - Saturday 18th of September 2004
In response to the question raised by ANnon, "if you continue to have below £200 in a savings account is there any real point in saving", I say the following:
It is very common for a parent or grandparent to make a small desposit in a savings account for their child/ grandchild when they are born. This might be £50, £100, £200, and could be much more if they are lucky. The idea is that over the period sibling grows up, the money will grow with interest until some time when he/ she is mature enough and will be allowed to use it for something useful, perhaps a little extra help when they go to university.
In circumstances like these, which are very common, one would therefore expect that a 'savings account' would not have an interest rate below the level of inflation, no matter how small the deposit.
If a grandparent failed to check the interest rate, but instead trusted that it would be reasonable, and paid in say £100 for a grandchild, that grandchild would get a shock 15-20 years later because the absolute value of the deposit would have hardly grown at all in and inflation would have eroded its value in real terms to a meagre amount.
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