Interest on savings plummets to 0%

Interest on savings plummets to 0%

Fears that the interest rate on savings accounts could crash to 0% are turning into reality, with two providers already cutting rates to zero.

West Bromwich, Britain’s seventh largest building society, has severed the underlying rate on its Bonus Saver account to 0%.

Customers of the Bonus Saver account can qualify for a 2% bonus if they make six or fewer withdrawals in a year.

It made the decision before last week’s base rate cut to 1.5% by the Bank of England, and other account providers are expected to follow West Bromwich’s lead.

Welsh bank Julian Hodge has also slashed interest rates to 0% on its easy-access savings account, whilst the Bank of Ireland pays just 0.001% on its Card Saver account and charges £2 for every withdrawal made at a bank branch.

Research by financial information website Moneyfacts found that 40% of savings accounts now offer interest rates of less than 1%, with over a quarter of providers paying less than 0.5%.

Moneyfacts analyst Michelle Slade said savers should find out what the interest rate their bank is paying, and review the rates on offer at other banks.

The Alliance & Leicester eSaver currently offers 3.6% on savings, whilst Abbey’s Instant Access Saver offers 3.5%.

Fixed rate savings accounts provide higher rates for those who are able to put money away without making withdrawals. Halifax’s International Regular Saver offers a 6.0% interest rate fixed for 12 months.

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