Metro Bank has taken an axe to the interest it pays on its savings accounts.
In a letter sent to customers in the past few days, the bank that prides itself on its customer-centric approach to retail banking has said that ‘following a review’, rates on two mainstream instant access accounts will be slashed to 0.05 per cent from August 12.
Its children’s account, Young Saver, is also taking a rates cut – from 0.75 to 0.5 per cent. Metro’s move has disappointed savings experts who believe customers impacted by the move should now seek alternative homes for their money.
Cut: The bank has said that ‘following a review’, rates on two mainstream instant access accounts will be slashed to 0.05 per cent from August 12
‘It’s bad news,’ says Anna Bowes, co-founder of rates scrutineer Savings Champion.
‘With all the talk about rising inflation and the possibility of increases in Bank Base rate, it must be galling for customers to be told out of the blue that their savings rates are not going up but down.
‘Savers should cut their losses and transfer to another provider.’
The rate cuts are substantial. On Instant Access Savings the rate will halve, from 0.1 to 0.05 per cent while on Instant Access Isa, it drops by more – from 0.15 to 0.05 per cent.
It means that on a balance of £20,000, the annual interest savers will earn from August falls from £20 and £30 respectively to a miserly £10.
Metro’s instant access rates are still above those offered by the major high street banks. On balances of £20,000, most big banks are paying annual interest of 0.01 per cent.
Bowes says that someone transferring £20,000 from a Metro Instant Access Isa to a Cynergy Online Isa (issue 13) would receive an extra £84 a year in interest once Metro’s rate cut comes into force. The Cynergy account pays 0.47 per cent interest and deposits up to £85,000 are covered by the Financial Services Compensation Scheme. Cynergy also offers an online easy access account (issue 40) that pays 0.5 per cent.
There was some good news on the savings front. Bank UBL UK has just launched a two-year fixed-rate savings bond paying a market leading rate of 1.11 per cent.
