Now smaller banks attack loyal savers
OVER the summer, loyal savers have suffered harsh cuts to their rates.
So far this year, a huge 900 cuts have been made, with more than 100 in the past couple of months. In some cases, customers have been earning half the interest they were earlier this year.
Many of the cuts have been meted out by building societies and smaller banks.
The big banks — NatWest, HSBC, Barclays, Lloyds, Halifax and Santander — have already cut their rates to the bone, paying as little as 0.01 pc. Smaller providers claim they have been paying over the odds as a result — and have acted accordingly.
Typically, the accounts affected are closed to new savers.
More reductions are expected to come as autumn approaches, even though rates for new savers are edging up.
Tom Adams, head of research at consumer website Savings Champion, says: ‘Providers are cutting rates to customers already in an account, and the trend shows no sign of abating.
‘ Only customers of a few providers remain unaffected. Banks and building societies rely on savers not voting with their feet and switching to a better deal.’
Virgin Money has more than halved rates on some accounts. If you signed up for its Saving to Buy Issue 3 easy-access account last summer at 1.05 pc, you now earn 0.5 pc. Virgin’s Easy Access Cash Isa, paying 1.11 pc a year ago, has been cut to 0.5 pc.
Shawbrook Bank’s 120 Day Notice account has also come under attack. The rate on Issue 30, on sale 20 months ago, has been cut from 1.9 pc to 1.25 pc. Issue 35, on sale last summer, now pays 1.25 pc, down from 1.55 pc.
This is no more than you can earn on the top easyaccess account from Ulster Bank where you don’t have to give 120 days’ notice that you want your money back.
And more cuts are in the pipeline. Saffron Building Society e-Saver Issue 11 falls from 0.7 pc to 0.45 pc next month, while some rates with Coventry BS, the third largest society, will go down from the end of this month.
Its two larger rivals, Nationwide and Yorkshire BS, cut rates earlier this year. Savers in Nationwide’s old Champion Isa and Champion Saver saw cuts of as much as 0.45 percentage points and now earn 0.5 pc.
Not all accounts suffering cuts are poor value. Coventry BS’s Poppy Isa rate will fall from 1.4 pc to 1.15 pc next month. But the new rate is higher than any available to new savers elsewhere. The society says it has been forced into action because of falling mortgage rates. Savers who took out top-paying accounts with a bonus last year should now move. Tesco Bank Internet Saver paid a top 1.22 pc a year ago. But after 12 months, you earn its ‘ standard rate’ of 0.4 pc. Post Office’s Online Saver is even worse value after a year, at 0.25 pc. Providers must write to tell you your rate is going down 14 days before it happens. If you have ignored the letter or thrown it away — as providers hope you will — your rate should be easy to find. It must be no more than one click away on your online statement and prominently visible on paper statements. Or you can call your provider and ask for it.