With base rate now unchanged for almost nine months, consumers may have become complacent when it comes to reviewing their savings products, assuming their rates are safe. However, as our research teams at Moneyfacts have reported, this is certainly not the case. Rachel Thrussell, Head of Savings at moneyfacts.co.uk comments:
“The latest seven institutions to announce rate cuts follow closely in the footsteps of 25 providers which have reduced their rates since the new year. The now, long list contains many of the market-leading providers including AA, Halifax, Heritable Banks, Northern Rock and the Yorkshire Building Society. If, as predicted the base rate falls later this year providers will almost certainly reduce rates further – a double whammy for consumers.
“With over a third of these providers cutting rates across the board, and some imposing rate reductions as large as 0.45%, consumers would have almost certainly noticed a significant change to their interest returns, especially with average instant access rates around 2 to 3%.
“The recently published financial reports of the ‘big four’ suggest falling retail profits within the UK, so are these rate reductions another means to boost the bottom line?
“With profit margins diminishing and competition growing, keeping a healthy balance between deposits and lending will be key to retail banking success. A small savings cut of, say, 0.05% may go unnoticed by many consumers and will cause minimal customer loss, but can prove a very considerable saving when applied to the collective sum of consumers deposits, potentially a huge pot of money!
ISA customers hit by cuts too
“With the ISA season upon us, we have seen many providers launching new mini cash ISA products or revamping their existing range to attract the new pool of customers come 6 April. If previous years are anything to go by, many of the top rates may only be around for a matter of a few weeks.
“However, rather unexpectedly, we have also seen three mini cash ISA providers reduce their rates within the last week, in some cases by as much as a quarter percent. Is this the start of things to come?
“Consumers should ensure they review their savings on a regular basis, as a market leading rate may not stay that way for long. They should keep an eye on the best buy tables published in the national press or on financial comparison websites such as www.moneyfacts.co.uk.”
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.