Savers warned to prepare for another cut in interest
THE dramatic reduction in the base rate to 0.1 per cent announced by the Bank of England on Thursday has yet to feed through to lower rates for cash savers – but it will.
Anna Bowes, a director of rate scrutineer Savings Champion, says most banks and building societies will start trimming rates in ten days’ time.
And when they do, they will be accounting for not one, but the two changes in Base Rate that have taken place this month – cuts that have seen it drop from 0.75 per cent to 0.1 per cent.
Bowes says: ‘For those with cash in variable rate accounts, their interest rates will come down at the beginning of April. By how much is difficult to gauge, but cuts are inevitable.’
Some financial institutions have little scope to trim, given the parsimonious rates already being paid on some accounts.
For example, anyone opening an Easy Saver account with Lloyds Bank is currently getting 0.1 per cent interest while those with money in Halifax Liquid Gold are receiving 0.05 per cent.
‘It is more important than ever to seek the best rates available,’ she says. ‘That means shopping around.’
One and two-year fixed-rate savings bonds may offer some solace although savers will have to deposit their money with littleknown brands.
For example, OakNorth Bank is paying 1.57 per cent fixed for one year – or 1.66 per cent for two years.
No withdrawals are permitted during the life of the bonds. Savers’ money is protected by the Financial Services Compensation Scheme up to £85,000.