Savers who signed up to top easy-access deals as little as six months ago are finding the rates paid on their savings slashed as banks make cuts to their back books.
While the best on-sale easy-access rate has fallen by 0.11 percentage points over the last month, challenger banks and building societies which pay the best savings rates are beginning to make cuts to accounts closed to new customers.
While the rates on these accounts are usually cut over a period of several years, banks are moving fast to make big cuts to accounts which topped our best buy tables as recently as November.
Savers who signed up for the best easy-access rate they could find last November could soon find themselves earning a lot less
For example, Coventry Building Society’s triple access saver paid 1.46 per cent on 5 November 2019 and topped This is Money’s best buy tables.
Today it pays just 0.81 per cent according to analyst Savings Champion, a difference of 0.65 percentage points, or £65 a year in interest on balances of £10,000.
That account also comes with a 0.31 per cent bonus which expires after a year – after that point, barring any further cuts, the account will pay just 0.5 per cent.
The Co-op Bank’s Britannia select access saver, which paid 1.4 per cent last November, will pay just 0.55 per cent from 24 June, a cut of 60 per cent.
Banks tend to offer easy-access accounts either as issues, which are consecutively launched versions of the same account paying different rates, or one variable rate account where all savers are paid the same rate.
|Account||Rate on 5 November 2019||Rate today||Difference|
|Coventry Building Society triple access saver||1.46%||0.81%||-0.65%|
|Virgin Money double take e-saver issue 12||1.45%||1.45%||N/A|
|Goldman Sachs’ Marcus||1.45%||1.2%||-0.25%|
|Kent Reliance issue 35||1.43%||1.43%||N/A|
|Co-op Bank Britannia select access saver issue 10||1.4%||1.4% (will be cut to 0.55% on 24 June)||N/A (for now)|
|Source: Savings Champion|
Goldman Sachs’ Marcus and Ford Money, for example, pay all savers the same easy-access rate – 1.2 per cent and 1.07 per cent, respectively.
In November, Marcus Bank paid 1.45 per cent, while Ford Money savers who were previously being paid 1.35 per cent will see their rate cut by 0.28 percentage points in just under two months.
Post Office savers who signed up to one of the best easy-access rates around last May could be just days away from seeing their savings rate plunge from 1.06% to just 0.01%
Brutal Post Office cuts being delivered
Savers who hold money in nine issues of the Post Office’s online saver, issues 36 to 45, will see rates on their money plunge from between 1.15 per cent and 1.45 per cent to 0.01 per cent once time-limited bonuses expire.
The Post Office made 105 cuts to closed easy-access accounts, Isas and notice accounts on 17 April 2020, 83 of which mean accounts are paying just 0.01 per cent.
Some savers who opened issue 36, which was available between 15 March and 9 May last year and paid 1.3 per cent, will still be receiving a bonus rate of 1.05 per cent for the next few days.
But with the underlying rate being cut from 0.25 per cent to 0.01 per cent, when the 12-month bonus expires savers will go from earning 1.06 per cent to 0.01 per cent.
This is a difference of around £105 a year on £10,000 in savings.
Savings accounts with time-limited bonuses have two elements; the bonus which is fixed for a certain period and then an underlying variable rate which banks can adjust.
Cynergy Bank, a challenger savings bank which uses bonus rates and frequently features in our best buy tables, is cutting the underlying rates on some of its easy-access accounts to 0.65 per cent, down from as high as 1 per cent.
How much savers will be affected will depend on how much of their rate is made up by a bonus and how much consists of a variable rate which has now been cut.
Savers who locked into a 12-month bonus a few months ago may feel they made the right decision and are able to ride out some of the chaos the coronavirus is causing the savings market.
Those who locked into issue 45 of the Post Office’s Online Saver will be earning 0.81 per cent until next February.
While this is less than the 1.3 per cent the account was previously paying, it is a lot more than the 0.01 per cent they could be earning if it wasn’t for the time limited bonus rate.
Savings Champion’s co-founder Anna Bowes said the cuts highlighted some of the advantages of the bonus system for savers.
Consistently best buy table-topping banks like Aldermore, Kent Reliance, Shawbrook Bank and Virgin Money have yet to make any cuts to closed accounts following the Bank of England base rate cuts in March, Savings Champion said.
The best easy-access rate is 1.2 per cent, and is offered by Marcus and RCI Bank. Both accounts can be opened online.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.