Savers urged not to be fooled by tempting interest rates that will soon come crashing down
Savers are urged not to be fooled by tempting interest rates that will soon come crashing down.
Some accounts promise up to 1.45 per cent, but will be more than halved within weeks.
The teaser rates come from little-known notice accounts which traditionally pay more interest than easy-access deals.
Savvy saving: Some accounts promise up to 1.45 per cent, but will be more than halved within weeks
But you are required to give your bank or building society up to 120 days’ warning before you make a withdrawal. Some accounts allow savers to take their money immediately but there will be a penalty.
This is often equivalent to how much interest you would have earned during the notice period. For example, on a 100- day notice account paying 1.35 per cent, the charge would be £37 on each £10,000. These accounts are popular with those who can plan withdrawals, many are disappearing as providers do not want to attract too much money in uncertain times. Harsh rate cuts also lie ahead.
Ecology BS 90-Day Notice account now offers a top rate of 1.45 per cent — topping the best easy access deal with National Savings & Investment Direct Saver at 1 per cent and six times greater than the average 0.22 per cent. It also beats the 1 per cent from United Trust Bank.
However, the notice account’s rate will drop on August 3 and again, on October 12. After the two cuts, the rate will have almost halved to 0.8 per cent.
Melton Mowbray BS Online 100 Day Notice account pays an attractive 1.36 per cent. But the rate tumbles to 0.75 per cent on Saturday. On September 8 the rate falls again to 0.6 per cent, less than half its current offer. Family BS 35 Day Notice Saver offered 1 per cent on sums between £1,000 and £10,000 until tomorrow, when the rate falls to 0.45 per cent. On balances between £10,000 and £25,000 the rate halves from 1.1 per cent to 0.55 per cent.
Manchester BS 60 Day Notice Saver falls from 1.1 per cent to 0.6 per cent on August 4.
The rate cuts follow the Bank of England’s slashing the base rate to 0.1 per cent in March. The time lag is due to building societies taking longer than banks to pass on rate cuts to savers, as well as rules governing notice accounts.
City regulator, the Financial Conduct Authority, demands good warning of rate changes is given. It means savers can take their cash without paying a penalty before the lower rate hits their pocket.