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Savers left out in the cold

Savers left out in the cold

Category: Savings

Updated: 27/11/2008
First Published: 25/11/2008

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 It is now over 6 months old so the content may be out of date.

So far, rates have been cut on just 22% of variable rate savings products, with most providers opting to pass on the full 1.50% cut or more.

If the remaining providers pass the cut on in full, then based on a £5K balance we could potentially end up with 12% of the market paying no interest whatsoever, 27% paying a rate of less than 1% and a staggering 52% paying a rate of 2% or less.

Michelle Slade, analyst at Moneyfacts.co.uk, comments:"With mortgage lenders not passing the cut on in full, savers were hoping that they would get off lightly, but so far their optimism has been misplaced.

"At the start of the month, there was an abundance of accounts paying well over 6%. These are now disappearing fast and will no doubt be gone by early next week as more cuts are announced.

"It is now more important than ever that savers review the rate they are getting, as with over half the market possibly receiving a rate of 2% or less, they could be left seriously out of pocket.

"Rates of over 5% may still remain, but these will be few and far between. Some of the best rates on offer from those who have already cut rates, or launched accounts since the base rate cut include:

Institution

Account Name

£5K

ICICI Bank UK

HiSAVE Savings

5.50%

Anglo Irish Bank

7 Day Notice Issue 2

5.40%

Anglo Irish Bank

Easy Access Deposit Issue 2

5.25%

Northern Rock

E-Saver

5.15%

Whiteaway Laidlaw Bank

60 Day Bonus

5.06%

Source: Moneyfacts.co.uk 25.11.08

"With banks still remaining wary about lending to each other, their savings book will remain an important part of their strategy.

"They will not want to drive their savers into the arms of their competitors, so hopefully we may see other providers restricting the cuts they make."

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 Any products featured may be withdrawn by their provider or changed at any time.

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