Barclays cut savings rate yet again

Savers at Barclays are dealt yet another blow as Britain’s third largest bank has cuts some of its savings rates for the third time in as many months even though the bank rate has only been reduced once in the same period.

Barclays defended its action and said it needed to realign its position in the marketplace. The bank added that we believe that our products are still competitive within their markets. However, analysts urge anyone with a Barclays savings account to move elsewhere.

Furthermore, it is expected that the Bank of England will cut interest rates by a quarter point in February, taking interest rates 5.5% to 5.25%. Barclays, along with other major banks, will more than likely reduce rates again when this occurs.

Barclays’ Savings Builder and Day to Day Savings accounts face a 0.24% reduction on 1 February. As a result, Day to Day savings will pay interest of just 3.69%, while Savings Builder will pay 4.17% on £10,000, 4.31% on £25,000, 4.41% on £50,000, 4.55% on £100,000 and 4.65% on £250,000.

Although the Day to Day Savings account is paying one of the highest rates available on sums as low as £1, higher rates are available if you are prepared to bank online, by post or telephone.

Barclays is not the first bank to cut its savings rates even when Bank rate hasn’t changed. Halifax, Britain’s biggest savings provider, reduced its rates in November and then again in December after interest rates were cut.

Sue Hannums at AWD Chase de Vere, an adviser, said it is bad enough when savings rates are cut by more than Bank rate but altering rates when there has been no change at all seems to be a growing trend. This is clearly a cost-cutting measure. Savers need to vote with their feet and show the big banks that they are not a walkover concluded Ms Hannums.

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