Over 20 savings providers slash variable rates
Less than a week since the Bank of England Base Rate cut, Moneyfactscompare.co.uk reveals more than 20 savings providers have slashed variable rates.
- Over 20 savings providers have cut variable savings rates since last Thursday, which include easy access, notice accounts, cash ISAs, lifetime ISAs, junior ISAs and children’s savings accounts.
- More than a dozen brands cut across a variety of variable rate accounts by the end of Friday (8 August), and on Thursday (7 August), that same day some customers were told their rate would be cut by the full 0.25% Bank of England Base Rate.
- Not every provider passed on the 0.25% cut, some did less, but others did more, such as Atom Bank cutting 0.58% off on its Instant Saver Reward, which now pays less than 4.00% (3.93%). Other brands withdrew and replaced their accounts, at a lower rate, again some now paying less than 4%, such as Cynergy Bank’s Online ISA (cut by 0.30% to 3.90%) and its Easy Access account cut by 0.45% to now pay 4.00%.
- Inflation is predicted to rise to 4.00%, and more savers could see their pots eroded in real terms, as more savings rate cuts are expected over the next few weeks. As it stands, less than a third of standard savings accounts (including fixed bonds and ISAs) pay more than 4%* but less than 10% of all accounts pay a variable rate of over 4%.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Savers will feel frustrated to see an abundance of providers cut rates since the Bank of England Base Rate cut. As more than a dozen brands cut by the end of last week, it’s only got worse, as over 20 providers have now cut since last Thursday, showing how quickly cuts are passed on to hard-pressed savers. It is essential consumers stay in tune with market movements and switch to ensure they are not getting a raw deal. Over the past week the Moneyfacts Average Savings Rate has dropped from 3.50% to 3.47%.
“In the coming weeks more savings providers will need to decide whether to pass on the 0.25% cut, but as we have seen over the last few days, sometimes they can cut by bigger or smaller margins. Atom Bank cut rates by up to 0.58% last week, and other providers withdrew and replaced accounts with lower rates. The rate moves really depend on the funding appetite of the savings provider, with many of the top rates still on offer from challenger banks and building societies. The cuts prove that a variable rate savings account does not need to be linked to the Bank of England Base Rate to get hit, but this cut does give providers a green light to review rates.
“As inflation is predicted to rise to 4% in September, it means many savers will see their pots eroded. As it stands, less than 10% of variable rate savings accounts pay more than 4% and it’s not much better including fixed deals, as overall less than a third of the standard savings market pays over 4%*. Savers need to keep a close eye on the market for any vanishing accounts and ensure they abandon their loyalty if it is not being rewarded with a decent savings rate.”
*Data note: Deals that are available to UK residents (easy access accounts, notice accounts, fixed rate bonds, variable cash ISAs and fixed cash ISAs) and exclude regular savers, children’s savers, variable rate fixed term bonds or ISAs, JISAs and LISAs, based on a £10,000 deposit, gross rates. Higher rates may be available for other levels of deposit.
Over 20 savings providers slash variable rates
Less than a week since the Bank of England Base Rate cut, Moneyfactscompare.co.uk reveals more than 20 savings providers have slashed variable rates.
- Over 20 savings providers have cut variable savings rates since last Thursday, which include easy access, notice accounts, cash ISAs, lifetime ISAs, junior ISAs and children’s savings accounts.
- More than a dozen brands cut across a variety of variable rate accounts by the end of Friday (8 August), and on Thursday (7 August), that same day some customers were told their rate would be cut by the full 0.25% Bank of England Base Rate.
- Not every provider passed on the 0.25% cut, some did less, but others did more, such as Atom Bank cutting 0.58% off on its Instant Saver Reward, which now pays less than 4.00% (3.93%). Other brands withdrew and replaced their accounts, at a lower rate, again some now paying less than 4%, such as Cynergy Bank’s Online ISA (cut by 0.30% to 3.90%) and its Easy Access account cut by 0.45% to now pay 4.00%.
- Inflation is predicted to rise to 4.00%, and more savers could see their pots eroded in real terms, as more savings rate cuts are expected over the next few weeks. As it stands, less than a third of standard savings accounts (including fixed bonds and ISAs) pay more than 4%* but less than 10% of all accounts pay a variable rate of over 4%.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Savers will feel frustrated to see an abundance of providers cut rates since the Bank of England Base Rate cut. As more than a dozen brands cut by the end of last week, it’s only got worse, as over 20 providers have now cut since last Thursday, showing how quickly cuts are passed on to hard-pressed savers. It is essential consumers stay in tune with market movements and switch to ensure they are not getting a raw deal. Over the past week the Moneyfacts Average Savings Rate has dropped from 3.50% to 3.47%.
“In the coming weeks more savings providers will need to decide whether to pass on the 0.25% cut, but as we have seen over the last few days, sometimes they can cut by bigger or smaller margins. Atom Bank cut rates by up to 0.58% last week, and other providers withdrew and replaced accounts with lower rates. The rate moves really depend on the funding appetite of the savings provider, with many of the top rates still on offer from challenger banks and building societies. The cuts prove that a variable rate savings account does not need to be linked to the Bank of England Base Rate to get hit, but this cut does give providers a green light to review rates.
“As inflation is predicted to rise to 4% in September, it means many savers will see their pots eroded. As it stands, less than 10% of variable rate savings accounts pay more than 4% and it’s not much better including fixed deals, as overall less than a third of the standard savings market pays over 4%*. Savers need to keep a close eye on the market for any vanishing accounts and ensure they abandon their loyalty if it is not being rewarded with a decent savings rate.”
*Data note: Deals that are available to UK residents (easy access accounts, notice accounts, fixed rate bonds, variable cash ISAs and fixed cash ISAs) and exclude regular savers, children’s savers, variable rate fixed term bonds or ISAs, JISAs and LISAs, based on a £10,000 deposit, gross rates. Higher rates may be available for other levels of deposit.
