Banks withdraw savings accounts after base rate is slashed to a joint record low of 0.25%
Banks and building societies have rushed to pull more than 25 savings accounts, dealing another blow to long-suffering savers.
Natwest and Co-op were among several others to cut interest rates, after the Bank of England (led by governor Mark Carney) reduced the base rate to a joint record low of 0.25 per cent on Wednesday.
It was the first emergency interest rate cut made since the 2008 financial crisis and was designed to shield the economy from the coronavirus crisis.
Natwest and Co-op were among several others to cut interest rates, after the Bank of England (led by governor Mark Carney) reduced the base rate to a joint record low of 0.25 per cent
The base rate had previously been set at just 0.75 per cent and had not been cut since August 2016.
Barclays withdrew its two and three-year cash Isas, which paid 1.3 per cent and 1.7 per cent, the night before and more banks followed within hours of the announcement.
Yorkshire Building Society pulled its market-leading limited access saver, which paid 1.32 per cent in interest.
And Leeds, Monmouthshire, Dudley and Tipton building societies all withdrew accounts which paid more than 1 per cent.
More deals are expected to vanish in the coming weeks, as Nationwide Building Society, Lloyds, Halifax, and Santander all said they were reviewing their already paltry rates.
Natwest confirmed it would cut interest on its Savings Builder account from 1.5 per cent to one per for balances under £10,000 from April 20.
And Co-operative Bank withdrew its SAS account which paid 1.3 per cent and replaced it with one which paid just 0.8 per cent.
Savings experts pointed out that few banks were quick to pass on interest rate rises when the base rate increased in 2017 and 2018.
The average easy access account now pays just 0.56 per cent, according to figures from analysts Moneyfacts, well below the rate of inflation which stood at 1.8 per cent in January.
Rachel Springall, of Moneyfacts, said: ‘Clearly the banks are much faster at cutting rates than they are passing on rises.
‘There are still many big banks paying much less than 1 per cent, so savers can do better. If savers are unhappy they would be wise to switch their money to a better account, as loyalty doesn’t always pay.’
A Barclays spokesman said: ‘We are constantly reviewing our savings products. Our flexible ISAs offer the flexibility of three free withdrawals during the term of the bond so savers can have the peace of mind that they can withdraw up to 30 per cent of the money, free of charge, should they need to.’