04-24-2006, 04:55 PM
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Administrator
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Join Date: Apr 2006
Posts: 27
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Banks cut savings rates
Banks are cutting the savings rates on current accounts and it looks very much by stealth, especially when the current account is tied to the base rate:
http://www.thisismoney.co.uk/saving-...4&in_page_id=7
Quote:
Savings accounts with guarantees linked to the base interest rate have been a hit with savers. But the accounts often come with a time limit and once their safety nets disappear they can suffer random cuts, making them much less competitive.
From May 1, investors in Barclays Tracker Savings will find their rate cut by 0.25%. The account will continue to track the base rate, but at a lower rate.
Those with up to £10,000 put away have a guarantee that they will earn no less than 1.2% below base rate - which is currently 4.5% - meaning they'll earn 2.64% after 20% savings tax (3.3% before tax).
But from next month they will see their interest rate drop as the bank changes the link with base rate. From then on it will only promise base rate less 1.45% - or 2.44% after tax.
Woolwich Branch Saver, once a best buy, initially pledged to move in line with the base rate. But when the guarantee was removed at the end of last year, the bank took just six weeks to cut the rate, even though base rate has not moved since last August.
Savers with up to £5,000 suffered a cut of 0.25% before tax to 2.68% (3.35%) in February.
Chelsea PostSaver40 - an account now renamed PostSaver Advantage and switched to easy access - was cut to 2.64% (3.3%) last month. Until March, savers were promised the base rate less 0.25% before tax, or 3.4% (4.25%). Abbey Flexible Saver account holders see cuts from yesterday after their guarantee ran out on April 1.
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