Act now to stop monthly income falling to 0.5pc
INCOME seekers will see their monthly payouts plummet by more than two-thirds if they sign up with the same big bank when their bonds mature.
They can do much better by switching to newer banks and building societies which have been pushing rates up.
In contrast, rates at the big players remain at rock-bottom.
Worse, the general level of interest rates is not expected to rise from 0.25 pc any time soon. The Centre for Economic Business Research, Capital Economics and Pantheon Economics expect no movement in base rate this year or next.
Switching providers is not as cumbersome as in the past. often providers will check your identity electronically, so you don’t have to provide the usual paper documents proving who you are and where you live.
Savers in the Halifax two-year fixed monthly income bond, maturing now, have earned 1.49 pc. Now the bank has only one bond on general sale — paying 0.55 pc for 12 months.
Those with a two-year deal maturing next month are on course to be even harder hit. They have earned 1.98 pc. If they reinvest with Halifax they will see their income drop by 72 pc.
Halifax’s three-year cash Isa maturing now has paid 1.98 pc. Its current offer is 0.6 pc fixed for two years. If you move into it this year your monthly income on each £10,000 will drop to £60 a year — or just £5 a month — from the current £16.50 a month.
Santander offered 0.75 pc a year ago, but that is now down to just 0.5 pc for a year. Lloyds paid as much as 1.75 pc to monthly income seekers in its twoyear fixed rate bonds maturing now. Its replacement pays just 0.55 pc.
You can limit the fall in your income with the newer banks. online bank Charter Savings Bank and Kent Reliance both pay 1.54 pc for one year — more than double the 0.55 pc at Halifax and 0.5 pc at Santander, HSBC and NatWest. Atom Bank pays 1.69 pc.
If you are unhappy about running your account online, Virgin Money pays 1.11 pc fixed until June 1 next year and is available through its branches, by post or phone.
If you are willing to tie your money up for two years Charter Savings Bank pays a top 1.75 pc and Virgin Money 1.6 pc.
Best deals on easy- access accounts come from Charter Savings Bank at 1.11 pc. Virgin Money pays 1.05 pc on its Defined Access Account. The only catch is you can make only three withdrawals a year from capital. You will earn even less on your cash Isa money. The top easyaccess deal comes from Charter Savings Bank at 1.05 pc. Virgin Money also pays 1.05 pc on its Defined Access Isa Saver. on one-year fixed-rate cash Isas, Charter Savings Bank pays 1.15 pc. Virgin money pays 1.11 pc with Yorkshire BS and Newcastle BS both at 1 pc. You’ll earn only slightly more if you tie your money up for two years: 1.25 pc with Paragon Bank online or 1.14 pc with Newcastle or Yorkshire BS. The National Savings Guaranteed Income Bonds — available only for those with maturing bonds — pay a better-thanaverage 0.9 pc for one year, 1 pc for two years or 1.2 pc for three years. Savers in its popular easy-access Income Bond saw their rate fall from 1 pc to 0.75 pc last month.