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Savers - fed up with big rate cuts and short term bonuses?

UK savers are faced with a huge array of savings accounts to choose from, but how can they pick a savings account that hasn’t had its rate slashed to a derisory level or find a savings account that doesn’t include a short term bonus?

Moneyfacts tables highlighting the most consistent best buy savings products over the last 18 months and 36 months could well be the answer to help savers steer clear of such interest rate uncertainty.

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Savings accounts with short term bonuses

Earlier this week Nationwide BS called for savings account providers to remind their savings customers of any changes in the savings rate or terms prior to the end of an introductory bonus period. In an ideal world this would be a great service to offer savers, by demonstrating a transparent approach and thus earning the trust, loyalty and respect of many savers. The downside of such a scenario is that once the saver sees the new rate, they may well be disappointed and opt to switch providers. Institutions use the bonus to attract new business and rely on a degree of customer apathy in not switching again once the bonus falls away. In reality this is unlikely to ever be adopted. If savers are happy to switch regularly between savings accounts with short term bonuses, they need to keep a note of when their bonus expires.

No strings savings accounts

Often a simple no strings savings account will offer an equally good return, without the need to jump through hoops or navigate a maze of complex terms and conditions. With such a fast changing market, unless you are prepared to move your savings accounts on a very regular basis, a consistently good performing savings account will offer a good return, without all of the time and effort of constantly searching the market. Moneyfacts.co.uk is the only financial comparison site to also provide savers information on the most consistent savings accounts.

Savings rates slashed by more than base rate cut

The December base rate reduction has seen many savings accounts rates being cut by amounts far more than the quarter point the Bank of England imposed. While some savers would have seen their savings accounts rates axed in one foul swoop, others have seen a similar cut but via two separate reductions, one following the December base rate cut, the other only a month or so previously when rates were stable.

Shockingly, the largest cuts have often come from the largest providers, including, Alliance & Leicester, Abbey, HSBC, Halifax, Lloyds TSB, NatWest and Royal Bank of

The largest cuts have not been across the board, but rather targeted at specific savings accounts or tiers. Some savers have seen their rates axed by more than double the base rate cut. And with many of the savings accounts already offering uncompetitive rates, the proportion of the rate shaved off is much higher. Take the example of the Halifax Liquid Gold, which saw a 0.36% cut. When we consider the rate was only 1.36% in November, the cut means more than a quarter of the whole rate vanishing.

The average savings account rate on Moneyfacts.co.uk across all providers is currently 3.77% (no notice at £1000), which is already lower than the current rate of inflation. Too many savers are keeping their hard earned savings in accounts which will in the long term see their savings fall in value.

Many of the worst hit savings accounts are no longer heavily marketed and are probably held by long standing customers who have held the account for many years. It’s just another example of when loyalty does not pay.

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