MILLIONS of savers are facing lower returns as major banks and building societies slash their savings rates.
The move follows the Bank of England’s decision to cut the base rate from 5.25% to 5% last Thursday.
The base rate influences the interest rates banks offer to customers on a range of products like mortgages, credit cards and savings
While mortgage holders are celebrating lower rates as it reduced borrowing costs, savers are left with the short end of the stick.
As borrowing costs drop, banks have also started to lower interest rates on some savings accounts.
Whether you’re affected or not will depend on the bank you’re with and the type of savings account you have.
For instance, with some types of account the interest rate you get on your savings is locked in for a set period of time.
With others – often easy-access accounts – the rate can change at any time.
When the Bank of England cuts the base rate it makes it more important than ever to check you’re getting the best rate on your savings.
We’ve compiled a list of the big banks and building societies cutting their savings rates now – plus explained how to compare rates at any time.
Other firms could announce further cuts in the future too. We’ve listed all those who’ve confirmed key account changes.
Chase is cutting the savings rate on its popular easy-access savings account, which currently pays 4.1% back on all deposits.
This account allows for unlimited withdrawals for free.
However, since May 13, 2024, the account’s savings rate has been tied to the Bank of England base rate.
This means that five business days after the Bank of England base rate changes, the saver’s annual percentage rate will also change to 1.15% below theirs.
This means, effect from August 8, the Chase saver variable rate will be cut from 4.1% to 3.85%.
This means someone saving £1,000 into this account over the next 12 months would earn £38.50 in interest – £2.50 less across the year than under the previous interest rate.
Chip slashed the rate of its variable rate cash ISA from 5.1% to 4.84% following the Bank of England’s announcement.
Cash ISAs are tax-free savings accounts. You pay no tax on the interest you earn.
This account’s interest rate tracks the base rate with a difference of 0.6%, which means that if the base rate falls or rises, Chip’s rate will rise or fall.
Unlike traditional savings accounts, ISAs or individual savings accounts allow individuals to save up to £20,000 a year tax-free.
Chip has also slashed the rate offered on its easy-access savings account from 4.84% to 4.58%.
This means someone saving £1,000 into this account over the next 12 months would earn £45.80 in interest.
The Co-operative Bank is also making a swathe of interest rate cuts across all its saving products, including ISAs.
For example, its easy-access Base Rate Tracker will see the following rate cuts from August 8:
The bank will also slash the rates offered on its instant access Online Saver from 2.65% to 2.53%.
The Select Access Saver, which allows a maximum of two withdrawals a year, will also see its rates cut from 4.09% to 3.84% from October 16.
This means someone saving £1,000 into this account over the next 12 months would earn £38.40 in interest from October.
To find out if your savings account is affected, visit www.co-operativebank.co.uk/products/savings.
Cynergy Bank has reduced the rate offered on its easy-access savings account for all customers.
The rate has fallen from 4.94% to 4.8%.
This means someone saving £1,000 into this account over the next 12 months would earn £48 in interest.
Cynergy Bank has also slashed the rate on its one-year fixed bond from 5.1% to 4.9%.
A fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
The rate on its two-year fixed bond has fallen from 4.9% to 4.7%.
Shawbrook Bank has reduced the rate offered on its Easy Access Account for new customers.
The rate has fallen from 4.60% to 4.36%.
This means someone saving £1,000 into this account over the next 12 months would earn £43.60 in interest.
Existing customers will also see their savings rate fall to the new level from August 20.
Customers must deposit at least £1,000 in their account to receive this rate.
THERE are four types of savings accounts fixed, notice, easy access, and regular savers.
Separately, there are ISAs or individual savings accounts which allow individuals to save up to £20,000 a year tax-free.
But we’ve rounded up the main types of conventional savings accounts below.
FIXED-RATE
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
NOTICE
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don’t lock your cash away for as long as a typical fixed bond account.
You’ll need to give advance notice to your bank – up to 180 days in some cases – before you can make a withdrawal or you’ll lose the interest.
EASY-ACCESS
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
REGULAR SAVER
These accounts pay some of the best returns as long as you pay in a set amount each month.
You’ll usually need to hold a current account with providers to access the best rates.
However, if you have a lot of money to save, these accounts often come with monthly deposit limits.
Skipton Building Society cut the rate offered on its Online Tracker from 5.25% to 5% for balances above £1 today.
This account is closed to new applications.
The building society has also slashed the rate offered on its Easy Access Saver from 3.80% to 3.55% to both new and existing customers.
This means someone saving £1,000 into this account over the next 12 months would earn £35.50 in interest.
Isbank, which offers a number of high-paying fixed-term bonds on the savings platform Raisin, is also slashing the rates on offer across several savings accounts.
On August 6, the interest paid on the bank’s one-year fixed bond will fall from 5.17% to 4.87%.
This means someone saving £1,000 into this account over the next 12 months would earn £48.70 in interest.
The rate offered on its six-month notice account will also be cut from 5.17% to 4.86% from August 6.
These accounts don’t lock your cash away for as long as a fixed bond account but require that you give notice before a withdrawal.
The savings rate on its nine-month notice account will also fall from 5.15% to 4.88% on August 6.
In response to the Bank of England Base rate change, Metro Bank will cut the rate offered on its instance access saver in September.
From September 2, the rate of the instant access saver will fall from 1.65% to 1.40%.
There is no minimum balance required to open an instant-access savings account.
This means someone saving £1,000 into this account over the next 12 months would earn £14 in interest.
NatWest is making a number of cuts to its saving rates later this month.
On August 29, the rate offered on its Digital Regular Saver will fall from 1.75% to 1.60% for balances above £5,000.
These accounts require that you pay a set amount each month to get the interest rate advertised.
The rate offered on its easy-access Flexible Saver will fall from 1.75% to 1.60% on balances up to £25,000.
This means someone saving £1,000 into this account over the next 12 months would earn £16 in interest.
Those with a regular Savings Builder account who pay less than £50 a month will also see their rates cut from 2.70% to 2.50% for savings up to £10,000.
Tandem has cut the savings rate offered on its Instant Access Saver.
The bank has cut the rate offered from 4.9% to 4.65%.
This means someone saving £1,000 into this account over the next 12 months would earn £46.50 in interest.
Tandem has also slashed the rate of its one-year fixed bond from 5.12% to 5.01% as of August 1.
Zopa is cutting the rates offered on both its Smart Saver and Smart ISA accounts.
The standard rate offered on the bank’s Smart Saver Pot will fall from 4.54% to 4.3% from August 19.
This means someone saving £1,000 into this account over the next 12 months would earn £43 in interest.
On the same date, the rate offered on the bank Smart ISA Pot will also fall from 5.08% to 4.8%.
The bank will also cut the rates offered on its boosted pots.
Boosting is a feature of the Smart Saver accounts, which allows you to increase the interest rate you receive.
In return for the extra interest, you need to give notice within the app before you can access your savings.
To find out more, visit www.zopa.com/smart-savings-hub-history.
A number of other major high street banks and building societies have told The Sun that they’re assessing cutting rates on their own savings account products.
Yorkshire Building Society says that is reviewing its variable rate savings accounts.
Nationwide said it is currently working through what this latest Bank rate change means for savers.
A spokesperson for Barclays also told The Sun: “We are reviewing our rates for customers who save with Barclays and will be able to provide more information of any changes in due course.”
HSBC is also keeping its savings rates under review.
WITH your current savings rates in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
Research price comparison websites such as Compare the Market, Go Compare and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you’ll want to consider any account that currently pays more interest than the current level of inflation – 2%.
It’s always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you’re saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.
