http://www.teletext.co.uk/personalfinance/moneyadvice/default.aspxen-gbFri, 11 Dec 2009 12:41:38 GMThttp://www.teletext.co.uk/images/Logo64x64.gifhttp://www.teletext.co.ukDear Teletext,]]>Dear Teletext,
Why are deposit-taking institutions, such as banks, able to discriminate on age grounds by offering higher interest rates to older customers?

It seems higher rates for those over 50 years old are common.

It isn't as if such deposits are age-related products, like annuities or life assurance.
Lloyd Richardson, Oldham.

]]>5a7ddab2fe3cde18a55c75628b0d3834http://www.teletext.co.uk/personalfinance/moneyadvice/5a7ddab2fe3cde18a55c75628b0d3834/Write+to+our+experts+for+help.aspxhttp://www.teletext.co.uk/personalfinance/moneyadvice/5a7ddab2fe3cde18a55c75628b0d3834/Write+to+our+experts+for+help.aspx
"These customers often have a higher amount of savings, which they are likely to rely on to fund either a monthly income or retirement fund.

"So they are more commercially aware and seek the best possible return."

Banks and building societies need to react to this by offering the best rates possible, Peter Gerrard says.

"Rightly or wrongly they will reserve some of their better savings rates for the over 50s."

Controlling the number of eligible applicants for an account allows the banks to increase profitability, savings expert Peter Gerrard says.

"It ensures only those customers who have larger amounts to invest and are looking for a longer-term investment will apply.

"By encouraging investments from an age group who have more money to invest, the banks are able to build up credit."

As this age group is likely to invest on a long-term basis the banks and building societies can use the funds to lend to others, Peter Gerrard says.

"This keeps interest rates on loans, mortgages and cards lower and eases the availability of credit - something banks have struggled with recently.

"It is this paralysis in lending that has meant public money has been needed to keep the banking system afloat."

Encouraging savers, particularly those with higher amounts to invest, to return to banks will help accelerate the much-needed economic recovery, expert Peter Gerrard says.

"However, don't always assume that the accounts offering specific rates for over 50s will be the best.

"Many times this can be a gimmick or will involve tying money up for a long period of time."

Peter Gerrard says very often you can find a better rate offered with another organisation that doesn't restrict applications for the account on age.

"Additionally if you're comfortable with conducting your accounts either online or over the phone, better interest rates can be achieved than traditional passbook savings accounts."

Peter Gerrard is a savings expert from comparison website Moneyextra.com.

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