Savers have suffered more than 160 interest rate cuts overall in four weeks.
It comes after last month’s announcement by National Savings & Investments of rates so low that the Treasury-backed bank is no longer seen as a major player.
Popular easy-access accounts and fixed-rate deals have been hit, with some banks closing accounts to new savers without offering replacements, even at lower rates.
Cuts: NS&I’s new rates are so low that the Treasury-backed bank has all but disappeared as a player in the market
Marcus, once a high flyer, cut its easy-access account’s rate from 1.05 per cent to 0.7 per cent last month.
Since September the top easy-access account rate for new savers has fallen by 30 per cent from 1.15 per cent to 0.8 per cent.
The rewards for many one-year fixed-rate bonds, dropped 29 per cent from a rate of 1.3 per cent to 0.92 per cent.
Anna Bowes, co-founder of website Savings Champion, says: ‘As feared, the devastating move by NS&I has killed off the rate rises from other providers.’
The falls come even though the new NS&I rates do not begin until November 24. The rate on its easy-access Income Bonds will fall from 1.15 per cent to 0.01 per cent.
It will give savers with £10,000 just £1 interest a year, down from £115 at the current rate.
| Account | Current rate | Rate originally planned for May 2020 | Rate from 24 November 2020 under latest cuts |
|---|---|---|---|
| Direct saver | 1% | 0.7% | 0.15% |
| Investment account | 0.8% | 0.6% | 0.01% |
| Income bonds | 1.15% | 0.7% | 0.01% |
| Direct Isa | 0.9% | N/A | 0.1% |
| Guaranteed growth bonds (1 year) | 1.1% | 0.1% | |
| Guaranteed growth bonds (2 year) | 1.2% | 0.15% | |
| Guaranteed growth bonds (3 year) | 1.3% | 0.4% | |
| Guaranteed growth bonds (5 year) | 1.65% | 0.55% | |
| Guaranteed income bonds (1 year) | 1.05% | 0.06% | |
| Guaranteed income bonds (2 year) | 1.15% | 0.11% | |
| Guaranteed income bonds (3 year) | 1.25% | 0.36% | |
| Guaranteed income bonds (5 year) | 1.6% | 0.51% | |
| Fixed interest savings certificates (2 year) | 1.15% | 0.1% | |
| Fixed interest savings certificates (5 year) | 1.6% | 0.5% | |
| Source: NS&I | |||
Its easy-access Direct Saver rate falls from 1 per cent to 0.15 per cent; the easy-access Investment Account drops to 0.01 per cent from 0.8 per cent, and its Direct Isa from 0.9 per cent to 0.1 per cent.
Savings have shot up since lockdown. But banks and building societies only want cash if they can lend it out. Otherwise it just costs them money, so they cut rates.
New top deals are not lasting long. Melton Mowbray BS’s two-year fixed-rate bond at 1.4 per cent was withdrawn after a day.
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