Savers hit by rate cuts up to double Bank of England’s 0.25% reduction

Customers urged to shop around for best deals as banks and building societies slash rates on their accounts

Savers are facing steep reductions on their returns as several banks cut rates by more than double the Bank of England’s base-rate drop.

Last week, the Bank reduced its rate by 0.25 percentage points, to 4 per cent.

However, some banks and building societies have cut their rates for savers by double that amount or more in just a matter of days. Experts are urging people to shop around for the best deal.

Among the steepest reductions, Atom Bank slashed its Instant Saver Reward account by as much as 0.58 percentage points, depending on withdrawal activity.

HBL Bank UK also made a dramatic move, reducing its one-year fixed-term deposit, offered through Raisin, by 0.53 percentage points, bringing the rate down to 3.47 per cent.

Cynergy Bank applied cuts of up to 0.45 points to its Online Easy Access Account and selected fixed-rate bonds, while Castle Trust Bank reduced its notice e-saver accounts by as much as 0.35 points.

Sidekick trimmed the rate on its High Yield Cash Reserve 6 account by 0.24 points, and Skipton Building Society lowered several variable-rate accounts by up to 0.5 points.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The speed at which easy-access rates have fallen is no surprise, given how responsive banks always are to the Bank of England cutting rates.

“However, the size of the cut will be frustrating to anyone hit with a cut of more than 0.25 per cent. There are a variety of banks that have made bigger cuts, some on easy-access accounts and some on fixed rate deals.”

These sharper cuts are often a signal that providers have already reached their savings targets and are trying to discourage new deposits, she explained: “This will tend to mean these particular banks have raised the funding they want, so will be cutting their rates to move further down the best-buy tables, and attract less cash.

“It’s how the banks control the money they have coming in, but it doesn’t make it any less irritating if your bank is cutting your rate.”

She also warned that savers might mistakenly assume rate drops are uniform across the sector, and not take action as a result. “When your bank gets in touch to say your rate has fallen it’s tempting to assume that it’s happening everywhere, so there’s no point switching. However, there’s a massive difference between the rates on offer.

“Some high-street giants are offering little more than 1 per cent on branch-based easy-access accounts, whereas the most competitive accounts from online banks and savings platforms offer more than 4.5 per cent. At times like this it’s well worth shopping around to see where your savings could be working harder.”

Alongside easy-access products, fixed-rate accounts – often considered a more stable option during times of rate movement – have also faced deeper cuts than the central rate reduction.

Atom Bank again featured among the largest movers, trimming a separate one-year fixed term deposit by 0.4 percentage points.

At Castle Trust Bank, cuts to notice accounts reached 0.35 points, while Birmingham Bank and iFAST Global Bank applied reductions of 0.28 and 0.3 percentage points respectively to selected fixed-rate products.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said savers should now be watching their accounts closely, particularly as rate reviews are expected to continue in the coming days.

Speaking to The i Paper, she said: “Savers are at the mercy of base-rate cuts, and as we have seen over the last few days. Now is the time for savers to be vigilant and check their accounts carefully, particularly as we are expecting more providers to review their rates in the coming days.

“The fact that inflation is expected to rise to 4 per cent means there will be savers soon seeing their pots eroded in real terms, so switching to a competitive account is essential.

“Those savers concerned over falling variable rates might now want to secure a fixed rate bond or ISA to guarantee the return on their hard-earned cash.”

More modest reductions were also widespread, with some providers chipping away at rates by smaller margins.

Raisin UK-linked accounts at UBL and Ziraat Bank fell by 0.22 and 0.23 points respectively, while StreamBank’s one-year fixed rate dropped by 0.16 points. At Charter Savings Bank, even small trims of 0.06 points affected both bonds and ISAs.