Spring clean your poor savings rates

By SYLVIA MORRIS, THIS IS MONEY AND DAILY MAIL SAVINGS EXPERT
Updated:

Savers should act now to ensure they make the most of easy access accounts. Rates are being cut, while bonuses paid for 12 months, to lure you into opening an account this time last year, are running out.

While base rate has stood at 0.5 per cent for the past ten months, banks and building societies have launched accounts with rates of 2 per cent to 2.4 per cent after tax to attract new savers, while paying loyal ones as low as 0.04 per cent after tax (0.05 per cent before); that's 40p interest a year on each £1,000 in the account.

New accounts include Sainsbury's Bank Easy Saver at 2.6 per cent , run by telephone or over the internet. It guarantees to pay at least 2 percentage points over base rate for a year to new savers.

Savings account

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But some loyal savers in older accounts have suffered rate cuts even though base rate has not moved.

David Black, from financial researcher Defaqto.com, says: 'If you have been in an easy access variable rate account for more than six months, check your rate.'

Nearly a quarter of the 460 easy access accounts on offer pay 0.08 per cent (0.1 per cent ) or less on balances of £5,000, says Defaqto.

But these figures include only schemes open to new savers: there are hundreds more among accounts closed to new savers.

Among the latest to cut are West Bromwich BS, which has just sliced 0.2 percentage points off its Branch Easy Access Saver, No Notice Saver Direct, High Income over 65s and its Stratus account. HSBC has cut up to 0.5 points off its variable Cash Isa rates.

Savers in Lloyds TSB eSavings will see their rate plummet next month when the bonus - originally paid for the first 12 months - starts to run out. The rate will plummet to 0.08 per cent (0.1 per cent ) on balances below £10,000.

NatWest Telephone Saver Plus account holders will also start to lose their bonus from next week.

The bank paid a 1.22 percentage point bonus for a year to those who opened this account - now closed to new savers - between January 12 and February 1, 2009.

If you are in a notice account, you can move your money straight away with a minimal fine.

With rates so low, the fine on moving £5,000 in a 60-day notice account earning 0.08 per cent (0.1 per cent ) works out at 65p in lost interest. On a 90-day notice account it's £1.

By moving your money into a better paying account, you can quickly cover the cost of the fine.

sy.morris@dailymail.co.uk

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