If you are incomes lower than 4% in your money in a month’s time, you MUST transfer accounts, says SYLVIA MORRIS
Savers – I urge you to check the interest rates on your easy-access accounts constantly in the coming weeks, but don’t necessarily switch yet.
Banks and building societies are cutting rates to pass on the drop in the Bank of England base rate from 4.75 per cent to 4.5 per cent last Thursday.
But while some of the top rates disappeared within hours, other providers are taking longer to cut theirs.
So, once the dust has settled in a few weeks’ time, when all of the providers have told us their new rates, you should move your easy-access cash to a better deal – if you are not earning at least 4 per cent.
Some of the best rates disappeared almost as soon as the base rate was cut. Last week, you could get an easy-access Isa paying 5.16 per cent.
Now, top providers Plum, Chip, Trading 212 and Moneybox have all shaved their Isa rates and pay between 4.82 per cent and 5.03 per cent.
Dealtime: Banks and building societies are cutting rates to pass on the drop in the Bank of England base rate from 4.75% to 4.5% last Thursday
Several top rate accounts have disappeared completely, with Close Brothers’ 4.7 per cent vanishing, while Atom Bank reduced its top Instant Saver Reward from 4.85 per cent to 4.6 per cent.
It’s another blow for savers already hard hit by two similar base rate reductions in the latter half of last year.
Shockingly, you could find that your bank is paying less than 1 per cent if it passes on the full 0.25-point fall in the coming weeks.
Many have already said they will cut the full amount. Skipton Building Society reduced rates on the variable rate accounts it offers by the full amount within just three hours of the base rate fall.
NatWest and Royal Bank of Scotland have both said your rate on up to £25,000 in their easy-access Flexible Saver will fall by the full 0.25 points on March 6 to 1.25 per cent.
Yorkshire Building Society rates will be reduced by 0.25 points on March 11. Principality is slightly kinder – its rates go down two days later by a slightly smaller 0.2 points. Lloyds, Halifax and Coventry BS say their rates are under review, so expect the worst.
Nearly two years ago, in March 2023, the powerful Treasury Committee dished out a stinging rebuke to big banks over their savings rates. They were paying less than 1 per cent on their standard
easy-access and cash Isa accounts while the Bank of England base rate stood at 4 per cent.
It appears that things have not improved and banks’ rates could end up below 1 per cent again, even with the base rate standing at 4.5 per cent.
The rates on standard easy-access accounts and cash Isas from Barclays, Halifax, Lloyds, HSBC, NatWest and Santander already make grim reading even before they pass on the rate cut.
Nevertheless, the bulk of the £800 billion the big banks are entrusted with by savers sits in these pitiful accounts.
The best rate I can find for savings up to £25,000 with the big banks is 1.5 per cent with HSBC Flexible Saver, with the worst Lloyds Easy Saver at 1.15 per cent – and that is before they have adjusted their rates for the latest base rate fall.
It’s the same on easy-access cash Isas, where you get just 1.15 per cent with a Lloyds Cash Isa and 1.5 per cent with NatWest on your full annual £20,000 cash Isa allowance.
And if they pass on the full 0.25 fall, that 1.15 per cent will end up as 0.9 per cent.
The last time the base rate was at 4.5 per cent – in May 2023 – the large banks paid between 0.85 per cent and 1.36 per cent. Top payers, on the other hand, were north of 3.75 per cent.
Meanwhile, Sainsbury’s Bank savings are set to transfer to NatWest Bank on May 1 , once the High Court approves the move in mid-April.
At one time a decent supermarket bank, Sainsbury’s rates are now lacklustre, mainly available online only and could get worse.
The move will also affect your protection as a saver under the Financial Services Compensation Scheme.
You will have just one lot of £85,000 cover on all your accounts with Sainsbury’s, NatWest and Ulster Bank if the move goes ahead.
