Cahoot slashes rate to 4.55%

By SASCHA HUTCHINSON
Updated: 00:00 EST, 28 April 2006

SAVERS with online bank Cahoot will this morning find their headline savings rate of 4.85% slashed to 4.55%, despite the base rate remaining unchanged since August 2005.

The change means that Cahoot, which has for months topped the table of no-frills online savings account, will be only marginally better than its direct rivals ING Direct and Egg, which pay 4.5%.

The rate of 4.55% will apply for customers who have a balance of up £250,000 in their online account. The rate for any amount above this will stay at 4.05%

Cahoot has followed the example of ING Direct, which last year made two cuts in its rate in several months, after wooing customers with a headline-grabbing rate of 5%.

Customers who have opened the Cahoot's Introductory rate savings account in the summer of 2004, will also suffer a whopping 0.75% cut to their savings rate, from 5.3% to 4.55%. The account, which is no longer available to new customers, dropped its rate to 5% on March 21, and will see it drop again to 4.55% today.

A spokesperson for Cahoot said it had conducted a review of the market and brought its online savings rate down in line with its competitors.

'It might seem like a big drop in one go but we've left it higher for longer than our competitors,' he added.