Some 25 banks and building societies have cut the rates on their savings accounts since the Bank of England lowered the base rate last week, with experts warning that now could be the best time to lock in a deal.
The Bank’s cut to 4.25 per cent from 4.5 per cent marked the fourth in the past year, and more are expected, especially given concerns over how Donald Trump’s tariff war could affect UK growth.
Deutsche Bank Research expects three further rate cuts this year in August, November, and December, while Pantheon Macroeconomics predicts two in June and November.
Governor Andrew Bailey said he was “still of the view that the path, gradually and carefully, is downwards.”
With rates coming down, providers are also cutting their savings rates. Figures from Moneyfacts show that 25 banks and building societies have reduced interest rates on their savings products.
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RBS and NatWest have both reduced rates on their fixed-term savings accounts by up to 0.33 per cent.
Metro Bank has reduced interest on their fixed-rate cash ISAs and fixed-term savings accounts by up to 0.25 per cent. Santander has also reduced interest on their junior ISAs by 0.25 per cent.
Those with an everyday saver account with Barclays will have seen their rate drop to 1.15 per cent in May.
However, there are many accounts still offering much better rates with cahoot offering an easy access deal with returns of 5 per cent.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Bank of England rate cuts are never going to fill savers with joy, but things may not be as bad as you think.
“Overall savings rates don’t move as far or as fast as mortgage rates, so it’s not too late to take some action now to make the most of your savings.
“For emergency savings in an easy-access savings account, it’s going to be important to keep an eye on your rate. Overall rates are falling, but some are still holding up far better than others.”
Now is a good time to consider fixed-rate savings for money you do not need to access immediately.
James Blower of the price comparison site The Savings Guru said: “The market expectation is that the base rate will head to 3.5 per cent by the end of the year so this is likely to spell the end of even 4 per cent interest rates, let alone the 5 per cent ones we have had until recently.
“My advice to savers is that anyone holding out hope that rates are going back up is likely to be hugely disappointed. The main way to protect from the falling rate environment is to get a fixed rate.”
For those who cannot lock their money away for a year or more, there are similarly good deals on accounts where you give advance notice of any withdrawals.
For example, Charter Savings pays 4.7 per cent on a 95-day notice account and 4.65 per cent on a 60-day notice deal.
Mr Blower said: “On £10,000, every percentage point difference is worth £100 in lost interest, so those tempted to think it is too much effort to switch – it isn’t. It often takes less than five minutes to open a new account with the best-paying providers – £100 for five minutes work is a good return.”
Best deals on savings accounts
The best rates as of Monday (12 May) can be seen below, but the top providers are changing daily, so it is worth checking before locking away your cash.
Currently, the best one-year fixed deal is with Coniston Bank, which is offering 4.52 per cent.
The best easy-access deal is with cahoot with a rate of 5 per cent.
Returns on savings tend to fall as the base rate does. Accounts will have rules and minimum deposit amounts. Check directly with providers before opening.
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