Savers issued stark warning – 10 banks set to slash interest rates | Personal Finance | Finance
Savers are being urged to shop around as 10 banks and building societies prepare to cut interest rates in March. Nine out of that total are set to slash rates in the next two weeks, according to analysts at personal finance site, Finder.
They say savers are still seeing the consequences of the Bank of England cutting its base rate from 4% to 3.75% in December. Kate Steere, Finder’s personal finance expert, said: “These rate drops emphasise a serious gap between the highest and lowest rates on the market – with some falling as low as 1%.”
She calculated that a drop to 1% from the current leading rate of 4.55% would mean a difference of £682 in interest based on average savings of £19,214 after a year.
Ms Steere said: “Unfortunately, there’ll be little for savers to smile about this spring, as I think we’ll see the base rate cut to 3.5% in March, thanks to a lower than expected inflation rate in January.
“If I’m correct, banks will see this as a free pass to slash even more rates, leaving savers with fewer competitive options.”
The 10 lenders listed by Finder as cutting rates are: TSB, Spring, NatWest, RBS, The Co-operative Bank, Coventry Building Society, Barclays, HSBC, First Direct and Virgin Money.
Accounts being cut include NatWest’s First Saver and RBS’s Revolve Account which both drop from 1.85% to 1.60% on March 6, according to the analysis.
The Co-operative Bank’s Cash ISA rate falls from 1.46% to 1.40% on March 8. The rate on Coventry Building Society’s Monthly Saver drops to 3.00% from 3.15% a day later.
Other accounts seeing rates cut include Barclays Everyday Saver, down from 1.06% to 1.00% on March 11 and HSBC’s Flexible Saver, which goes from 1.15% to 1.05% on March 12.
For savers looking to get a better return, Ms Steere said: “The most important thing is to make sure you’re earning more than the rate of inflation – otherwise your savings are essentially losing value.”
She said there are still deals above 4% on the market, including Tembo’s HomeSaver which is currently offering a boosted 4.55% on balances up to £25,000 as long as you keep the account open for 12 months.
Chase still offers a rate of 4.5% on its boosted Saver, according to Ms Steere, who added: “If it’s a Cash ISA you’re looking for, there are competitive options with eToro (4.61% AER), Plum (4.42% AER) and Moneybox (4.39% AER).”
