Savers hit by ‘Grinch-style’ cuts as rates reduced on over 200 accounts
SAVERS are being warned about Grinch-style cuts to returns as interest rates are being slashed on over 200 accounts, The Sun can reveal.
Britain's biggest banks, including Barclays, HSBC, Santander and NatWest, as well as the government-backed NS&I, are all cutting rates for loyal customers.
The Sun scoured banking spreadsheets to reveal that over 200 accounts have had rates cut since the beginning of December until the beginning of January next year.
Consumer rights expert Martyn James said: "The Grinches are out in force at the big banks this season, cutting savings rates at the one point where they think we'll be too busy to notice.
"If you're affected, then put the bank on the naughty list and switch to a better deal - there are loads still available.
"Don't let Scrooge snip your savings."
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Savers are being urged to check if their account is affected.
Whether you're affected or not will depend on the bank you're with and the type of savings account you have.
For instance, with some types of accounts, the interest rate you get on your savings is locked in for a set period of time.
With others - often easy access accounts - the rate can change anytime.
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Average savings rates have been steadily declining over the past 12 months.
Currently, average easy-access rates stand at 2.96%, down from 3.19% in 2023, according to MoneyFactsCompare.co.uk.
Similarly, the average one-year fixed bond rate has decreased from 4.31% to 4.1% since December 2023.
That's why ensuring you're getting the best rate on your savings is crucial, especially when the Bank of England could make further cuts to the base rate later this month.
Rachel Springall, finance expert at Moneyfactscompare.co.uk said: "Challenger banks are offering attractive returns and it would be unwise to overlook them when they have the same protections in place as a high street bank.
"Savers need to proactively keep on top of the best rates and review their pots regularly to see if they are getting a raw deal."
To help you stay informed, we've compiled a list of major banks and building societies currently reducing their savings rates, along with tips on comparing rates at any time.
It's also worth noting that several challenger banks are still outshining well-known high-street brands, offering up to 8% returns.
However, these deals won't last forever.
TYPES OF SAVINGS ACCOUNTS
THERE are four types of savings accounts fixed, notice, easy access, and regular savers.
Separately, there are ISAs or individual savings accounts which allow individuals to save up to £20,000 a year tax-free.
But we've rounded up the main types of conventional savings accounts below.
FIXED-RATE
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
NOTICE
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don't lock your cash away for as long as a typical fixed bond account.
You'll need to give advance notice to your bank - up to 180 days in some cases - before you can make a withdrawal or you'll lose the interest.
EASY-ACCESS
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
REGULAR SAVER
These accounts pay some of the best returns as long as you pay in a set amount each month.
You'll usually need to hold a current account with providers to access the best rates.
However, if you have a lot of money to save, these accounts often come with monthly deposit limits.
So, if your money is sitting in one of the accounts listed below, it might be time to consider switching to secure a better deal.
BARCLAYS
Barclays told The Sun that it will be reducing rates across some of its savings products in the New Year.
However, a spokesperson added: "We will not make any changes to our children's accounts or Help To Buy ISAs, to support younger savers and first-time buyers."
Effective January 6, 2025, Barclays will lower the savings rates on its easy-access Rewards Saver and Blue Rewards Saver accounts.
The Rewards Saver rates will be reduced from 2.75% to 2.51% when no withdrawal is made in the calendar month and from 0.85% to 0.76% when a withdrawal is made in the calendar month.
The Blue Rewards Saver rates will be reduced from 3.40% to 3.17% when no withdrawal is made in the calendar month and from 1.01% to 0.76% when a withdrawal is made in the calendar month.
From February 13, 2025, Barclays will also lower the savings rates on its easy access Everyday Saver and Rainy Day Saver accounts.
Everyday Saver rates will be cut from 1.51% to 1.26% for balances up to £10,000 but increase from 1.16% to 1.26% for balances over £10,000.
Rainy Day Saver rates will be cut from 5.12% to 4.87% for balances up to £5,000 but will remain unchanged at 1.16% for balances over £5,000.
COVENTRY BUILDING SOCIETY
Coventry Building Society slashed the savings rates offered on over 40 savings accounts on December 3.
However, the rates offered on a further four accounts will change in January.
The building society's Monthy Savings Account rate will fall from 3.87% to 3.67% on January 19.
Those with a Moneymanager or Telephone Moneymanager account will also see their rates drop from 2.35% to 2.15% on the same date.
HSBC
HSBC will also cut rates across some of its instant access cash ISAs from December 11.
HSBC Loyalty Cash ISA rates for Premier customers will fall from 3.2% to 3%.
Loyalty Cash ISA rates for all other customers will fall from 2.7% to 2.5%.
Rates offered on HSBC's Help to Buy ISA will also fall from 3.45% to 3.2% for balances up to £12,000 and from 1.74% to 1.49% for balances over this amount.
This account isn't open to new customers, but existing customers receive a 25% government bonus (worth up to £3,000) on their savings when they use it to buy their first home.
NATWEST
NatWest will make a number of cuts to its savings rates this week.
On Thursday, December 5, the rate offered on its Digital Regular Saver will fall from 1.60% to 1.50% for balances above £5,000.
These accounts require that you pay a set amount each month to get the interest rate advertised.
The rate offered on its easy access Flexible Saver will also fall from 1.60% to 1.50% on balances up to £25,000.
Those with a regular Savings Builder account who pay less than £50 a month will also see their rates cut from 2.50% to 2.25% for savings up to £10,000.
The bank's easy access cash ISA rates will fall by 1.6% to 1.% for balances under £25,000.
NatWest's Help to Buy ISA rates will also fall from 2.5% to 2.3% on Thursday.
SANTANDER
All Santander savings products linked to the Bank of England base rate decreased by 0.25% on December 3.
This change affected the easy access Rate for Life and Good for Life savings accounts.
As a result, the interest rate on the Good for Life ISA was reduced from 5% to 4.75%.
Similarly, the Rate for Life account dropped from 5.25% to 5%.
The rate offered on the bank's Easy Access saver also fell from 1.6% to 1.3%.
However, Santander is also dropping the savings rate offered on its Junior ISA, which is offered to children under 18.
The interest rate will fall from 3.2% to 3.05% on December 9.
Skipton Building Society
Skipton Building Society is slashing the savings rates offered on dozens of variable rate savings accounts on December 9.
For example, those with a standard easy access Branch eSaver will see their savings rate cut from 3.25% to 3%.
Customers savings into the building society's 90 Day Notice Account will also see their savings rate cut from 3.5% to 3.25%.
Check to see if the savings rate on your Skipton account is changing below.
YORKSHIRE BUILDING SOCIETY
Yorkshire Building Society is slashing the savings rates offered on dozens of variable rate savings accounts on December 10.
For example, the rate offered on its easy access Everyday Saver will fall from 3.25% to 3%.
Those with a Loyalty Regular Saver, which allows customers to save up to £250 a month for one year, will see their interest rate fall from 5.65% to 5.45%.
Customers with an easy access Cash ISA will also see their savings rate cut from 4.3% to 4.05% on December 10.
FIND THE BEST SAVINGS RATES
WITH your current savings rates in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
Research price comparison websites such as Compare the Market, Go Compare and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you'll want to consider any account that currently pays more interest than the current level of inflation - 2%.
It's always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you're saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.
TOP SAVINGS RATES
The best fixed rate currently offered is Al Rayan Bank's one-year fixed bond, which pays 4.8% and only requires a minimum investment of £1,000.
The best notice accounts offer slightly higher rates than the best fixed-term bonds.
These also come with more flexibility when accessing your cash.
Monument Bank's 90 day notice account offers savers 5.01% back with a minimum £25,000 deposit, for example.
However, if you're looking for a savings account without withdrawal limitations, then you'll want to opt for an easy-access saver.
These do what they say on the tin and usually allow for unlimited cash withdrawals.
The best easy-access savings account available is from Atom Bank, which pays 4.85% - and you only need to pay a minimum of £1 to set it up.
If you want to build a habit of saving a set amount of money each month, a regular savings account could pay you dividends.
Principality Building Society's Six Month Regular Saver offers 8% interest on savings.
It allows customers to save between £1 and £200 a month.
Save in the maximum, and you'll earn 27.53 in interest.
While regular savings accounts look attractive due to the high interest rates on offer, they are not right for all savers.
You can't use a regular savings account to earn interest on a lump sum.
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The amount you can save into the account each month will be limited, typically to somewhere between £200 and £500.
Therefore, if you have more to save, it would be wise to consider one of the other accounts mentioned above.