Occasional Paper No. 7: Stimulating Interest: Reminding savers to act when rates decrease

Reminders make a notable difference to switching behaviour in savings accounts around the time of interest rate decreases.

Stimulating interest: Reminding savers to act when rates decrease [PDF]


Consumers who take out savings accounts with short-term high interest rates often do not transfer their money when the rate falls. Whilst there may be good reasons not to switch, the lack of action by consumers could be caused in part by behavioural biases such as limited attention and present bias.

Using a randomised controlled trial we investigated the effects of different reminder letters on switching behaviour among over 20,000 savings account customers around the time of an interest rate decrease.

Overall, our results show that reminders made a notable difference. The fact of getting a reminder was more important than its precise phrasing and increased switching by between 5.6 – 7.9 percentage points 20 weeks after the rate decrease. The timing of reminder had an effect on the type of switching: those who received a reminder before the rate decrease were more likely to switch to another firm or product, or withdraw money than those who did not receive a reminder, whereas those who received a reminder after the rate decrease were more likely to switch to a comparable account with a higher rate at the same firm.

This research indicates that improved disclosure can encourage consumers to act when it is beneficial to do so.


Paul Adams, Stefan Hunt, Laura Vale and Redis Zaliauskas

The authors work in the Chief Economist’s Department of the Financial Conduct Authority.


Systematic deviations from 'rational' behaviour which help all of us understand and process the world around us but may also lead to errors.

Bias describing our disproportionate aversion to losing something as compared with the desire to acquire it when measured relative to a reference point.

Bias describing the human tendency to value gains in the present more highly than equivalent or larger gains in the future such that when the future comes they regret such choices – their preferences are inconsistent through time.

A study in which the analysis compares the behaviour of one or more 'treated' groups who receive the intervention you want to test against the behaviour of the 'control' group who do not receive it. Participants are randomly allocated into the control and treatment groups at the start of the trial. Trials can either be in real world settings (field trial) or in an artificial environment (laboratory trial).