After Bank of England rate cut, why you'll need to act fast to avoid a mediocre deal: SYLVIA MORRIS reveals how
As the Bank of England reduced the base rate from 5 per cent to 4.75 per cent last week, most savings providers couldn’t move fast enough to pass on the cut to their customers. But not all of them.
A handful of providers have shown up the rest by raising rates – and they offer deals that surpass most of those that were so hastily withdrawn.
App-based Trading 212 and Moneybox pushed up their easy- access Isa rates marginally to 5.17 per cent apiece.
Impressively, this is almost a full two percentage points above the average easy-access Isa rate of 3.21 per cent – and more than twice as generous as some of the High Street banks.
Top deals: A handful of providers have shown up the rest by raising rates – in the wake of the Bank of England's base rate cut
Hodge Bank increased its two-year fixed-rate cash Isa and its five-year fixed-rate bond to 4.31 per cent and 4.39 per cent respectively.
SmartSave, Kent Reliance and Shawbrook Bank increased some of their rates, although they cut or withdrew others.
The decision from these savings providers to raise rates makes a mockery of those who claim they must cut rates following the base rate cut.
So, when you get an email from your savings provider telling you it is cutting your interest rate, don’t think you have to take it on the chin.
But you’ll have to move sharpish if you want to avoid falling on to a mediocre rate. In the past, building societies and traditional banks have given customers a few weeks’ notice before passing on rates.
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What has surprised me this time round is how quickly they have swung the axe.
They usually mull over any change in rate for weeks and then announce new ones to come into effect at the start of the following month.
This time round, Skipton BS announced cuts that came in within hours of the base rate change.
Yorkshire and Principality also quickly announced their new, lower rates within 24 hours – although they don’t come into effect until the start of next month. NatWest swiftly announced rate cuts coming into force next month too.
Ulster Bank says its Loyalty Saver rate will go down to 4.5 per cent. At the start of this year, it paid 5.22 per cent, so savers have suffered a much bigger drop than the overall 0.5 point cut in base rate since then.
The speed of the rate cuts is in marked contrast to when rates were rising when it took some banks months to pass on the increase to savers.
Others, including Leeds and Coventry building societies, along with Halifax and Lloyds, were quick to tell us last week that their rates are under review – which is another way of saying cuts are on the way.
Top rates which disappeared within hours of the Bank of England announcement last week include Coventry BS Triple Access Saver (Online) at 4.83 per cent, Secure Trust Easy Access 18 (4.75 per cent), Aldermore Double Access (4.75 per cent) and Beehive Base Rate Tracker (4.6 per cent and due to fall to 4.35 per cent shortly).
Cash Isas were also in the fray with Coventry Triple Access Isa (Online) at 4.8 per cent vanishing while Zopa’s rate went down from 4.8 per cent to 4.55 per cent.
Others cut back their rates sharply. Chetwood Bank Easy Access Savings went from 4.82 per cent to 4.61 per cent, OakNorth Limited Edition Easy Access is down to 4.5 per cent from 4.82 per cent and Oxbury cut from 4.87 per cent to 4.61 per cent.
I predict that top rates will settle around the 4.6 per cent level, well below the 5 per cent plus at the start of the year.
NS&I rates are likely to fall again too. New rates are in the pipeline to come into effect next week (November 20), but these could fall again if it finds it is attracting too much money. Direct Saver and Income Bonds go down to 3.75 per cent from 4 per cent.
The Premium Bond prize pool rate falls to 4.15 per cent for the December draw from 4.4 per cent with the odds lengthening to 22,000 to one from 21,000 to one.
But be warned. These cuts are an adjustment for the August reduction in base rate from 5.25 per cent to 5 per cent. Another cut could still be in the offing after the latest base rate change.
Updates on the way at Nationwide
Have you got a Nationwide savings account that is no longer on sale? There’s a good chance as there are lots of them – two dozen at least at my most-recent count.
Big changes are on the cards from February when your account will get a new name, interest payment date, sort code and account number as the society moves savings accounts on to its updated computer system.
For example, your CashBuilder, Direct Easy Access, Instant Access, Instant Access Saver or Instant Saver will be renamed Easy Access Saver.
Nationwide will make a one-off payment on February 2025 to cover interest paid from December 31 this year and February 6 next. As a result, you could receive more than one payment this tax year.
