Interest on Isas slashed at big banks

SAVERS face a miserable start to the year as banks and building societies continue to cut rates.

Santander is cutting the rate on its easy-access Isa Saver to just 0.25 pc taxfree on sums up to £10,000 and 0.75 pc on larger amounts from the end of next month. Those with more than £25,000 in their account have seen the rate halve over the past 12 months. at the start of last year they earned 1.25 pc.

Savers are transferred into this account once they have been in their Direct Isa account for 12 months.

HSBC Loyalty cash Isa fell to 1.3 pc this week for Premier account holders, down from a previous 1.5 pc.

For its advance account holders, the cut means you earn 1.2 pc, down from 1.4 pc while other customers earn 1.1 pc, down from 1.3 pc.

Some building societies are also starting to lower rates or close toppaying accounts to new savers, following cuts from the big banks.

Teachers BS has closed its easyaccess Premier Saver, which paid 1.08 pc after tax (1.35 pc before) while Hinckley & rugby BS now pays 0.72 pc (0.9 pc) on its Premium Saver easy access account, down from 0.88 pc (1.1 pc) for all savers.

Over the past two years, the average rate paid by banks and building societies to new savers on easy-access accounts has nearly halved. Then the average rate was 0.66 pc (0.82 pc). Now it’s 0.38 pc (0.48 pc).

The cuts come even though Bank of england base rate has been frozen at 0.5 pc for nearly seven years.