Exact date when major bank cuts highest savings interest rate for easy access – best alternatives
A major bank has confirmed it will cut interest rates on its best easy-access savings accounts.
Santander is reducing the rate offered on its Easy Access Saver Limited Edition (Issue 3) off-sale variable rate account.
It currently pays savers 5.20% on balances between £1 and £250,000.
However, on May 20, the interest rate offered will drop by a whole percentage point to 4.20%.
From today (8 March), Santander will contact all affected account holders to inform them of the new rate two months in advance.
All other terms of the account remain the same and customers can access their funds at any time without any fees.
The retail bank attributes the reduction in savings interest rates to the current market conditions.
A Santander spokesperson said: “Santander regularly reviews product rates to ensure we continue to help our customers get the most for their money in a way that is sustainable in the volatile wider market conditions.
“Our Easy Access Saver Limited Edition (Issue 3) customers will continue to benefit from our best easy access level of 4.20% from May.”
Should I move my money now to get a better rate?
According to MoneyFactsCompare.co.uk, the account remains the best paying account for the time being for people with savings between £1 and £25,000.
Cahoot’s Sunny Day Saver (Issue 1) pays 5.2% interest on savings between £1 and £3,000.
So if you saved $1,000 throughout the year, you would earn $52 in interest if you didn’t make a withdrawal.
Virgin Money offers the second best easy access rate available with its Defined Access E-Saver Issue 21.
Savers get 5.11% back on deposits between £1 and £250,000.
This means that for every €1,000 you save, you get €51.10 back.
However, if you make more than three withdrawals per year, the interest rate temporarily drops to 2%.
Cynergy Bank’s Online Easy Access Account (Issue 69) offers savers 5.1% interest back on deposits between £1 and £1 million, and Hampshire Trust Bank’s Online Easy Access Account (Issue 18) offers 5.09% back on savings between £1 and £250,000.
Personal finance expert Martyn James said: “Switching accounts can be a great way to make some money or make some extra money on the side, but the devil is in the details.
‘Virtually all transfer deals can be withdrawn at any time.
“But more importantly, they all come with benefits. You may have to have your wages deposited into the account or a certain amount of money is deposited into the account every month.”
How do I find the best savings interest rate?
If you are trying to find the best savings rates, there are websites you can use that will show you the best rates available.
If you do some research on websites like MoneyFacts and price comparison sites including Compare the Market and Go Compare, you’ll quickly see what’s out there.
These websites allow you to tailor your searches to an account type that suits you.
There are four main types of fixed savings accounts: notice period, easy access and regular savings account.
According to Moneyfacts data, the best paying savings rate is currently 5.2%.
An easy-to-access account does what it says on the tin and usually allows unlimited withdrawals.
These accounts usually have lower returns, but are a good option if you want the freedom to move your money without being charged a penalty.
A fixed-rate savings account offers one of the highest interest rates, but it comes at the cost of not being able to withdraw your money within the agreed time period.
This means your money is tied up, so even if interest rates rise, you can’t move your money to a better account.
Some providers offer the option to record, but this comes with high costs.
Cancellation accounts work in a similar way, but your money can be locked for shorter periods as savers only need to give notice before withdrawing money.
The highest interest rate on one-year fixed bonds is currently 5.28%, and the highest paying notice period is 5.45%.
Finally, there is a regular savings account. These accounts generate a decent return, but only if you pay a fixed amount every month.