Some savings account fall by more than base rate cut
February 20, 2008
Many savers in the UK could lose out after it was shown that some savings accounts have come down by significantly more than the base rate cut. The Bank of England cut the base rate by 0.25% last week, and many lenders announced rate cuts on both borrowing and savings. However, whilst most lenders have passed on the full 0.25% cut on borrowing some lenders have applied above and beyond the 0.25% rate cut on savings accounts.
Saga has been identified as being one of the major culprits of slashing the rate on savings accounts despite only a moderate cut in the base rate. Although the Bank of England only cut its base rate by 0.25% Saga, which offers financial products to the over fifties, has cut the rate on its one year fixed rate account by 0.85%, which is over three times the level of the base rate cut.
News is still being awaited from some banks with regards to whether their savings interest rates will fall and if so by how much, but the Icelandic bank Kaupthing Edge has kept its easy access savings account at 6.5%. In the meantime a number of other lenders have reduced their rates by slightly more or slightly less than the base rate cut, whilst West Bromwich Building Society has introduced a new savings account that pays 6.75%, but there are restrictions, including a minimum deposit of £1000.
With interest rates due to come down again over the coming months, with some experts predicting a further cut as early as March, savers are being advised to take action quickly in terms of finding a fixed rate savings account that offer competitive rates before banks get the opportunity to cut rates again.
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