Anyone with savings account urged ‘check now’ before Reeves ISA speech | Personal Finance | Finance
Millions of UK savers are at risk of earning less interest as several major banks prepare to cut their savings rates in the coming weeks. NatWest and the Royal Bank of Scotland are set to reduce rates on eight of their savings accounts, including popular instant access and children’s accounts, starting July 15, with rates dropping as low as 1.15% for instant access products.
HSBC and Co-op Bank customers will also see reductions later in July, with some accounts falling to just over 1.5% interest. These changes follow the Bank of England’s last base rate cut and come as savings rates across the market begin to trend down after a period of historic highs. Experts warn that many people could be missing out on hundreds of pounds in extra interest by sticking with accounts that no longer offer competitive rates.
Kate Steere, personal finance expert at Finder, said: “If you were earning the new NatWest or RBS rate of 1.15% AER with the amount we found the average Brit has saved (£16,067), you’d get just £185 in interest over the course of a year. There are much more competitive rates available.
“For example, if you opened a Plum Cash ISA with a rate of 4.98% AER (including a 12-month 1.69% bonus) using the £16,000, you could earn up to just over £800 in interest over the year (dependent on any rate changes) – a potential £600 boost to your savings.”
With further base rate cuts predicted as early as August, the money expert said now is a crucial time for savers to compare their options and consider switching.
Ms Steere said: “It’s essential to act fast if you want to get the most from your savings.
The best easy-access accounts are still paying up to 5% on smaller balances, while one-year fixed-rate deals offer up to 4.6%.
For Cash ISA savers, a review of accounts is even more important as potential changes to the £20,000 annual allowance loom. Despite opposition from many savers and savings providers, the Chancellor is expected to announce an overhaul of the current Cash Individual Savings Accounts (ISAs) allowance in a bid to encourage more people to invest in Stocks and Shares ISAs and give businesses a boost.
While it’s unclear how much Ms Reeves may propose in her Mansion House speech on Tuesday, July 15, experts anticipate the allowance could be cut to between £4,000 and £10,000 a year.
Ms Steere said: “Variable rates are subject to change, so if you are still looking to use your 2025/26 ISA allowance – and you can afford to lock your cash away – now is also a great time to seek out a good deal on a fixed-rate ISA.
“Using the full tax-free allowance is more important than ever with reports that Rachel Reeves will announce a cut to the Cash ISA limit in her Mansion House speech next week. Currently, Cynergy Bank is offering 4.32% AER for a one-year fix.”
