Banks withdraw savings accounts as rates slashed

BANKS and building societies have rushed to pull more than 25 savings accounts, dealing another blow to long-suffering savers.

Natwest and Co-op were amongst several others to cut interest rates, after the Bank of England ( led by governor Mark Carney, pictured) reduced the base rate to a joint record low of 0.25pc

on Wednesday. It was the first emergency interest rate cut made since the 2008 financial crisis and was designed to shield the economy from the coronavirus crisis.

The base rate had previously been set at just 0.75pc and had not been cut since August 2016.

Barclays withdrew its two and three-year cash Isas, which paid 1.3pc and 1.7pc, the night before and more banks followed within hours of the announcement. Yorkshire Building Society pulled its market-leading limited access saver, which paid 1.32pc in interest.

And Leeds, Monmouthshire, Dudley and Tipton building societies all withdrew accounts which paid more than 1pc.

More deals are expected to vanish in the coming weeks, as Nationwide Building Society, Lloyds, Halifax, and Santander all said they were reviewing their already paltry rates.

Natwest confirmed it would cut interest on its Savings Builder account from 1.5pc to one per for balances under £10,000 from April 20.

And Co-operative Bank withdrew its SAS account which paid 1.3pc and replaced it with one which paid just 0.8pc.

Savings experts pointed out that few banks were quick to pass on interest rate rises when the base rate increased in 2017 and 2018.

The average easy access account now pays just 0.56pc, according to figures from analysts Moneyfacts, well below the rate of inflation which stood at 1.8pc in January.

Rachel Springall, of Moneyfacts, said: ‘Clearly the banks are much faster at cutting rates than they are passing on rises.

‘There are still many big banks paying much less than 1pc, so savers can do better. If savers are unhappy they would be wise to switch their money to a better account, as loyalty doesn’t always pay.’

A Barclays spokesman said: ‘We are constantly reviewing our savings products. Our flexible ISAs offer the flexibility of three free withdrawals during the term of the bond so savers can have the peace of mind that they can withdraw up to 30pc of the money, free of charge, should they need to.’