Watch out for Savings Rate Shavings
Released
on: October 9, 2009, 4:07 am
Author: uSwitch.com
Industry: Financial
Despite
the base rate remaining static for six consecutive months, and
with another hold expected from the MPC today, the latest market
analysis from uSwitch.com
reveals that savings providers are still intent on cutting rates
across their product ranges. In the last month alone, 27 products
have had their rates shaved by an average of 0.33% or up to 3%,
in a move to safeguard profit margins.
Providers
who have cut interest rates in the last month include:
- Lloyds
TSB has cut its Monthly Saver account rate by 3% and its 1
year fixed rate ISA rate by 1%
- Egg's
Internet Savings Account bonus rate has dropped by 0.75%
- Bank
of Scotland's Instant Access Savings Account Reward reduced
by up to 0.35%
- RBS
and NatWest cash ISA range rates cut by up to 0.25%
- Selected
rates across Nationwide's fixed rate bond range have been
slashed by up to 0.50%
No-notice
savings accounts
Lloyds TSB, Egg, Bank of Scotland and the Norwich and Peterborough
Building society are the 'not-so' fantastic four, when it comes
to reducing interest rates. Amongst this group, average cuts of
0.89% AER have been introduced on no-notice savings products
in the last month. Lloyds TSB asserted itself as lead culprit,
with the rate of its Monthly Saver account slashed by 3%, meaning
it now pays interest at a measly rate of just 2%. Bank of Scotland
has also disappointingly cut rates on its Instant Access Savings
Account Reward by between 0.20% and 0.35%.
It
is also bad news for the grey market with Norwich and Peterborough's
50 Plus Savings account now paying a meagre 1.25% following a
rate reduction of 0.15%
Fixed
Rate Bonds
In the fixed rate bond market, around 10 providers have been guilty
of introducing new issue bonds at significantly less competitive
rates than their withdrawn predecessors. On average, this group
of providers' newly launched bond rates are up to 0.55%
lower than the products they replace. Nationwide is amongst the
worst offenders, with rates on its fixed rate bond range slashed
by up to 0.50%.
Cash
ISAs
Over 50s savers looking to top up their ISAs from this week will
be particularly disappointed by the news that, in advance of the
increased limits coming into effect, four providers (Lloyds TSB,
RBS, NatWest and Norwich and Peterborough Building society, all
implemented rate cuts across their ranges by an average of 0.25%.
Lloyds TSB has imposed the most significant rate cuts, amounting
to 1% on its 1 year Fixed Rate ISA (£9,000 - £15,000 investment
tier). Similarly, RBS has introduced a 0.25% rate cut across many
of the tiers within its Instant Access Cash ISA range, whilst
NatWest has followed suit with the introduction of rate cuts of
up to 0.25%, rendering the returns on some of these accounts as
low as as 0.5%.
Rumina
Hassam, savings expert at uSwitch.com comments: "Savers haven't
had an easy ride over the last 6 months, and these latest rate
cuts must be yet another bitter pill to swallow. With the base
rate remaining static, providers no longer have an excuse for
cutting rates as they did during the period October 2008 to March
2009, yet still savers are being penalised with more savings shavings.
"Savers
need to keep a close eye on providers who use the 'withdrawal
and replace' tactic to sneakily introduce products with less competitive
rates. In particular, rates on shorter term 1 and 2 year new issue
bonds are becoming less and less competitive as providers seek
to encourage savers to tie in their cash for longer. Savers also
need to be aware that market leading rates across savings products
are rarely around for long, with some only lasting a matter of
weeks. Savers need to be agile in applying for the stellar rate
products as soon as they appear – in this case good things don't
come to those who wait."
See
the full version of this press release.
For
more information please contact:
Tracy North 0207 802 2925 / tracynorth@uswitch.com
About
uSwitch:
uSwitch.com is a free, impartial online and telephone-based comparison
and switching service, helping consumers compare prices on gas,
electricity, water, heating cover, home telephone, broadband,
digital television, mobile phones, personal finance products and
car insurance.
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