Big banks cut easy access rates to 0.25pc
brITaIN’s five biggest banks have all slashed rates to a paltry 0.25 pc on their main easy- access savings accounts.
They have meted out a new round of harsh cuts, chopping rates by up to two-thirds — despite making billions of pounds of profit in the first three months of this year.
Lloyds, halifax, Santander and Natwest now pay just 0.25 pc — a derisory £2.50 interest a year on £1,000 of savings.
barclays joins them on august 1. hSbC pays an even lower 0.05 pc on its Flexible Savings account.
The cuts come even though bank of England base rate has been frozen at 0.5 pc for more than seven years.
The banks’ excuse is that the amount of money they make from lending to homebuyers is under pressure because of fierce competition as borrowers side- step the more expensive deals in favour of cheap tracker or fixed-rate loans.
The knock- on effect is lower rates for savers.
but the big banks’ net interest margins — the difference between the amount they earn on mortgages from borrowers and what they dish out to savers — have risen or at least stayed steady over the 12 months to March 31. only Santander’s fell slightly, from 1.83 pc to 1.78 pc. at Lloyds banking Group — which includes halifax — the margin went up from 2.6 pc to 2.74 pc. rbS’s margin stayed steady at 2.15 pc, while barclays’s rose from 3.6 pc to 3.62 pc. Despite this, barclays announced last month that it is to cut the rate on its Everyday Saver to just 0.25 pc. For those with between £25,000 and £ 50,000 in their account, that represents a cut of 37 pc from 0.4 pc. The cuts come as banks try to stem the money flowing into their coffers. Some £42 billion has been deposited in easy access accounts in the year to March 31, latest bank of England figures show. at the same time, the average interest rate has fallen from 0.8 pc to 0.7 pc, and could drop even lower. Even worse are tumbling rates from Natwest, part of rbS, on its Instant Saver. The rate halved from 0.5 pc to 0.25 pc on balances between £1 and £50,000 from last month. on higher balances, the rate fell from 0.75 pc to 0.25 pc — a 66 pc fall. Santander cut the rate on its Everyday Saver to 0.25 pc earlier this year and has launched a new version of its eSaver account paying just 0.35 pc.
but savers only earn an extra 0.1 pc for 12 months. after that, Santander moves you into its Everyday Saver. Lloyds and halifax perform the same trick.
Lloyds puts you into its Standard Saver, while with halifax you end up in its Instant Saver. both pay just 0.25 pc.
better deals are on offer elsewhere (see table). however, be wary of banks and building societies offering top rates but limiting the number of withdrawals you can make.
If you are happy to cap your withdrawals to six a year, the new west bromwich bS Limited access Saver — in branches and through the post — pays 1.15 pc.
Yorkshire bS, along with its brands Chelsea and barnsley, pays 1.1 pc on its Triple access Saver, and you can take money out on three days a year.
If you want an account with no withdrawal restrictions, go for Shawbrook bank’s online Easy access 5 at 1.25 pc.
In the high Street, building societies offer much better rates than big banks. Coventry pays 1.15 pc, National Counties 1.26 pc and Newcastle bS 1 pc.