Banks still letting savers down with cuts on variable-rate accounts (2024)

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Savers hoping for a reprieve after the Bank of England decision not to cut interest rates last week are set to be sorely disappointed.

The link between its base rate - which will stay at 0.75 per cent at least for the next few months - and what you can earn with an easy-access account has been severed in recent months.

In fact, savers have suffered more than 1,000 cuts on variable-rate accounts since the base rate was raised from 0.5 per cent in August 2018, according to Savings Champion.

There are more drops in the pipeline from the likes of Halifax, NatWest and Santander.

Big banks hold £675 billion of our money in easy-access accounts.

Anna Bowes, director at Savings Champion, says: 'Leaving money to languish in a high street bank is the worst thing you can do. They pay some of the worst rates available.'

Last week, Santander said the profit margin between what it charges borrowers and pays savers fell slightly last year.

To halt this decline, savers will pay the price in a highly competitive mortgage market.

The bank will, in May, slash by a third the rate paid to savers with up to £20,000 in its 123 current account.

It goes down to 1 per cent from 1.5 per cent. The amount of cashback customers can earn on household bills will also drop.

Some NatWest and RBS rate cuts come into effect next week. Their Instant Saver rate will halve to 0.1 per cent on balances up to £25,000.

It means you will see just £10 interest on savings of £10,000. The rate on larger balances up to £1 million will be 0.2 per cent.

Holders of NatWest First Reserve and Primary accounts will suffer the same cuts from March 30.

Loyal Halifax Instant Saver and Lloyds Standard Saver customers will also see rates reduced to 0.1 per cent later this month.

These accounts are not available to new customers. But they are where loyal savers who open a Halifax Everyday Saver or Lloyds Easy Saver accounts usually end up after 12 months of putting money aside.

Last week, Virgin Money — now part of the Clydesdale & Yorkshire Banking Group (CYBG) — cut rates by as much as 0.8 percentage points.

Loyal savers in its Easy Saver Reward accounts will see rates drop from 1.45 per cent to 0.75 per cent. Others will earn 0.5 per cent, from 1.3 per cent.

Big players in the savings market are also cutting the rate they pay to new savers or are withdrawing their accounts from sale.

Nationwide pays 0.9 per cent to new savers opening its Triple Access Saver, which restricts you to making three withdrawals a year.

When the building society first introduced the account in mid-October it paid 1.21 per cent. It cut the rate to 1.1 per cent for new savers in December and again last month to 0.9 per cent.

Yorkshire BS has withdrawn from sale its Limited Access Saver at 1.35 per cent. Savers should act now and switch to a better deal.

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