I urge savers to be on the alert. Rates on some easy-access accounts are already being cut, significantly reducing the rewards for saving prudently.
The Bank of England has kept its base interest rate steady at 5.25 percent for almost a year.
But that hasn’t stopped savings providers from scrapping deals in anticipation of a rate cut.
First out was Marcus, who cut his online savings rate from 4.75% to 4.55%. The reason he gave was that he was attracting too much money.
Chip then followed suit, cutting its Instant Access Account from 5.01 per cent to 4.84 per cent, while Saffron Building Society’s E-Saver now offers 4.5 per cent, up from 4.8 per cent previously.
Cuts: Savings providers have been cutting back on the deals they offer in anticipation of a cut in the Bank of England’s base rate.
Charter Savings Bank and Kent Reliance have also cut rates along with building societies Chorley, Buckinghamshire, Dudley and Harpenden.
Some of the cuts will apply only to new savers, rather than those who already have an account, but I expect some existing customers will soon be affected too.
If providers are cutting rates before cutting the base rate, imagine what they will do when the Bank of England finally acts.
However, some are swimming against the tide and raising rates. This means that the average rate paid on an easy-access account has actually increased from 3.1 percent a month ago to 3.12 percent today.
Providers that have increased rates include Monument Bank (5.03 per cent, but you need £25,000 to open an account), Virgin Money (4.76 per cent with a maximum of three withdrawals a year) and Secure Trust (4.9 per cent on £1 or more).
You’ll also need to move your money if you opened a bonus account last August, when the base rate hit 5.25 percent.
For example, Cahoot Simple Saver Issue 1 was among the highest paying at the time, at 4.9 percent, but after a year it transfers the money to your savings account, at a measly 1.2 percent.
On the other hand, easy access cash ISAs are holding up well. An easy access cash ISA with chip pays 5.1 per cent.
Plum pays 5.17 per cent, but limits you to three withdrawals a year and includes a 0.88 percentage point bonus for the first year for new ISAs. For transfers, you get the non-bonus rate of 4.29 per cent.
It’s not a flexible ISA either. These accounts allow you to withdraw money and replace it without affecting your £20,000 annual allowance, as long as you do so in the same tax year.
Zopa pays 5.08 percent with no withdrawal restrictions and includes a 0.5 percent bonus for 12 months.
But beware of falling rates. Principality BS’s new Online 5 Access Bond pays 5 percent, but 3.55 percent after 12 months.
NS&I says tidying up is not necessary to clean up
Last week, I mentioned the pop-up message I received on the National Savings & Investments Premium Bond Prize Checker app this month when I failed to win a prize.
Now NS&I tells me it has 11 different messages.
Mine said: “Your Bonds will not be forgotten. Don’t be tempted to cash in your Bonds if you think they won’t bring you new luck.”
‘If you do this, you will lose a drawing, which means less chance of winning a prize.’
Of the 11, my favorite is: “There’s no need to sort! Keeping all the Bond numbers in a consecutive sequence may look neat and tidy, but it won’t improve your chances of winning.”
‘The only thing that improves your chances of winning is having more bonuses.’
