Savers gloomy as rate cuts continue

Savings account interest rates continue to plummet following the Bank of England’s base rate cut to a new record low of 1%.

In the 48 hours before the Bank of England announced its decision, 34 providers had already cut interest on their savings accounts, according to price comparison site uSwitch.com.

Fixed rate accounts were the hardest hit, dropping on average 0.58% compared to the overall average of 0.53%.

Some accounts had their interest rate slashed by as much as 1.25%.

Rumina Hassam, personal finance expert at uSwitch.com, said: “We fully understand that banks are under a lot of pressure as they experience the toughest economic climate since the early nineties; however it does seem short-sighted to cut rates by more than the base rate decrease.

“Surely, now more than ever savings providers should be doing whatever they can to encourage people to save rather than removing the main incentive?”

Consumer group Which? believes savers should show the big banks what they think of the rate cuts by moving to smaller providers.

Which? spokesperson Peter Vicary-Smith said: “Savings rates are a major area of concern for consumers and it’s no wonder given the eagerness of banks to slash their already miserly rates at the drop of a hat.

“The big-name high street banks have consistently let their customers down so savers should vote with their feet by moving their money to one of the smaller institutions still offering decent rates.”

Meanwhile, moneysupermarket.com commented that the base rate cuts are pushing consumers ‘dangerously close’ to the point where they decide that it’s no longer worth saving.

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