With returns decreasing on more than 240 types of accounts across the UK, savings analysts say that September has brought the largest savings rate cuts in recent history.
Sainsbury’s and Nationwide are only a couple of the account providers who are slashing rates, and some customers have seen their interest rates cut by as much as one per cent. Offering a glimmer of hope, savings experts have also reported that the fixed-rate savings bond market will experience the first rate increases in quite some time.
Since the Funding for Lending programme was introduced by the government in the summer of 2012, savers in the UK have endured a tumultuous time, with many left watching as their savings income has been cut in half. The latest round of cuts occurring in September may have resulted from the Bank of England’s recent announcement that base savings rates will likely not increase for a while.
Anna Bowes, founder of SavingsChampion.co.uk, which tracks the savings rates of banks and building societies, stated, “September was a terrible month for existing savers with 241 rate cuts across the market.”
She continued by saying that at the same time, however, several firms have begun vying for the top spot of the fixed-rate savings bond market, resulting in increased rates for savers willing to tie up their money for a period of time. According to Bowes, rate increases are “long overdue” and savers are able to finally see a little light at the end of the tunnel.
Last month, Nationwide reduced the rate for its Loyalty Saver Issue 1 account by 0.5 per cent, bringing the current rate to 2.1 per cent. At the same time, Sainsbury’s cut the rate for its Cash ISA account in half, the NS&I Income Bonds rate was slashed by 0.5 per cent to 1.25 per cent, and the Newcastle Building Society reduced the rate for its Loyalty Access ISA Issue 2 from 2.25 per cent to 1.5 per cent.
Thus far in October, Sainsbury’s has also reduced the rate for its Easy Saver account by 0.7 per cent to only one per cent. All the while, rates for the Cheshire, Derbyshire, and Dunfermline Platinum Notice savings accounts have all been cut in half to 1.25 per cent.
Despite the recent rise taking place in the fixed-rate savings bond market, Britons looking for instant access to their funds are still experiencing low rates. According to SavingsChampion.co.uk, the average rate for best-buy, easy access accounts remain hovering at a paltry 1.5 per cent, which is more than half of the 3.2 per cent savers were receiving in August 2012.