uSwitch.com: Banks quick to cut savings rate

by Kay Murchie

Story link: uSwitch.com: Banks quick to cut savings rate

The Bank of England has made aggressive cut in interest rates in the last two months but lenders have been slow to pass on the reduction to consumers, until the Government intervened and some lenders finally caved in to the pressure.

However, according to a study by price comparison service, uSwitch.com, providers have cut their savings interest rates either equal to, or above the reduction in interest rates.

The study by the website found that savings interest rates have been reduced by between 1.5% and 2.55%, meaning some rates have been cut a whole percentage point more than the rate cut was.

uSwitch found that 24 savings providers were quick to pass on the rate cut on their best products, while 47 withdrew their savings accounts altogether.

Lloyds TSB has reduced the interest rate on its Easy Saver 2012 account by 1.5%, while Capital One has cut the interest paid on its variable-rate and “base beater” savings accounts by up to 2 points, according to uSwitch.

Meanwhile, Norwich & Peterborough building society has implemented a 2 point reduction on its Gold Savings and Family Regular Savings accounts, while Anglo Irish Bank has reduced returns on fixed-rate bonds by up to 2.4 percentage points.

Louise Bond, personal finance manager at uSwitch.com, said once again providers have demonstrated their willingness to act fast and cut rates when it serves their purpose.

Following the base rate cut, numerous savings providers have taken drastic action in an attempt to safeguard their margins, added Ms Bond.

The plethora of changes brought in by providers highlights the need for consumers to keep a close eye on their savings accounts, explains Ms Bond.

However, Ms Bond acknowledges that there are high interest rate options remaining, but with further interest rate cuts expected, they won’t be around for much longer.