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Rate cut on one in ten savings accounts

Rate cut on one in ten savings accounts

Category: Savings

Updated: 04/11/2009
First Published: 04/11/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Over one in ten savings accounts have had their rates reduced in the last seven months, despite the Bank of England's base rate remaining static since March.

Research conducted by Moneyfacts.co.uk has revealed that 10.1 per cent of variable rate savings accounts have suffered a rate reduction in what is already a historically uncompetitive market.

In the last month alone, 3.9 per cent of all accounts have been subject to rate cuts. These include:

• Bank of Scotland – Rates reduced by 0.05% and 0.12 per cent
• Clydesdale Bank – Rates reduced by between 0.50 per cent and 0.75 per cent
• Halifax – Rate reduced by 0.05 per cent and 0.12 per cent
• Intelligent Finance – Rates reduced by between 0.26 per cent and 0.36 per cent
• Leeds Building Society – Rates reduced by between 0.10 per cent and 0.25 per cent
• Marsden Building Society – Rates reduced by between 0.10 per cent and 0.45 per cent
• National Counties BS – Direct Access re-tiered and £1 tier reduced by 0.86 per cent
• Yorkshire Bank - Rates reduced by between 0.50 per cent and 0.75 per cent

These cuts mean that almost half of all variable rate accounts on the market pay the base rate 0.5 per cent or less. Furthermore, over one in five (22.8 per cent) pay a paltry rate of 0.10 per cent or less.

"Once again, it is savers and pensioners - groups that rely on income for their savings that find themselves worse off. Savers will be asking how providers can justify cutting rates further, when bank base rate has remained on hold," commented Michelle Slade, spokesperson for Moneyfacts.co.uk.

"From the beginning of November new regulations came into effect from the FSA requiring providers to give two months notice ahead of disadvantageous interest rate changes. It appears that a number of providers have pre-empted these changes and reduced rates before the new rules came into force."

In the seven months since the last base rate alteration, just 3.5 per cent of accounts have benefitted from rate increases.

"Savers need to ensure they regularly review the rate they are receiving and switch accounts if the rate payable is no longer competitive," Ms Slade added.

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