Rates continue to plummet on savings accounts

| November 7, 2009
Rates continue to plummet on savings accounts

One in ten savers have had interest rates cut on their accounts in the past six months despite the Bank of England’s base rate being held, according to new research.

A study by Moneyfacts found 10% of variable savings accounts are paying lower rates than they were in May.

Only 3.5% of variable rate accounts have seen interest rates increase over the same period, despite banks vying for savers’ deposits.

In just the past month, providers have cut rates on 4% of variable rate accounts, slashing up to 0.86% off the interest paid.

Nearly half (49%) of variable rate accounts are playing interest of 0.5% or less, while almost a quarter offer returns below 0.1%.

“Savers are already experiencing some of the lowest rates ever and this will be another bitter blow to take,” said Michelle Slade, Moneyfacts spokesperson.

“Savers will be asking how providers can justify cutting rates further, when the base rate has remained on hold.”

Consumer advice magazine Which? said savers who find themselves being paid an absurdly low rate of interest should consider moving banks.

‘This news underlines the importance of keeping a close eye on your savings – and of voting with your feet when you’re getting a poor return on the cash you put by,” said James Daley, Which? Money editor.

“Consumers who take the time to shop around for a great deal could earn above 3% AER. ”

From this month, new savings regulations require savings providers to give customers at least two months notice of interest rate cuts.

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