TSB and NS&I customers urged to 'cancel their accounts'
UK savers have been urged to find better deals after several banks cut interest rates. The Bank of England may have kept rates steady this week but TSB, NS&I and others have all announced cuts to try and win custom amid the Cost of Living crisis.
The average one-year fixed-rate savings bond currently on sale is paying 4.43%, which is down from 4.63% in August and 5.34% a year ago, the financial data provider Moneyfacts said this week. Mark Hicks at investment platform Hargreaves Lansdown, said: “Fixed rates are still the best option for anyone who doesn’t need the money close at hand. They offer similar rates to the easy access market, and mean savers can lock in these rates for the entire fixed period."
Rachel Springall at Moneyfacts says that whichever account savers choose, it is vital they explore “the more unfamiliar brands,” as so-called challenger banks currently pay some of the best rates. The cuts already announced include TSB.
TSB has cut the rates on a number of its most popular accounts including Easy Saver, Cash Isa Saver, eSavings and Young Saver. For example, Easy Saver currently pays 1.4% on up to £25,000, or 1.5% if you include the 0.1% introductory interest bonus, and those rates are being reduced to 1.3% and 1.4% respectively.
And NS&I has cut the interest rates on its “British savings bonds”. The growth bonds had paid up to 4.6%, but this maximum rate – for those tying up their cash for two years – was reduced to 4.25%, the Treasury-backed financial provider says.
As NS&I says, “most banks only guarantee your savings up to £85,000,” whereas it is backed by the Treasury and is “the only provider that secures 100% of your savings, however much you invest”.
“Many people leave opening an Isa to the final months of the tax year, but if you have the cash available to bring this forward to before the budget, it really does make sense to do so early this year,” says Jason Hollands at wealth management firm Evelyn Partners.