Halifax cuts rates for second time

By SYLVIA MORRIS, THIS IS MONEY AND DAILY MAIL SAVINGS EXPERT
Updated: 11:03 EST, 2 July 2008

Halifax has cut the rates it pays on some of its variable rate accounts. It is the second time savers have suffered since the Bank of England base rate was reduced by 0.25 percentage points to 5% on April 10.

Rate cuts: Halifax cut rates for the second time this year

The drop comes even though base rate is expected to remain at its current level this month.

The cuts come while other banks and building societies have been raising rates, or at least holding them steady.

Those in Web Saver, Monthly Saver, Isa Saver, Saver Reward and Instant Saver have seen their rates drop by 0.15 percentage points this week. Isa Saver account holders now earn as little as 3.06% and 3.71% at best, making it one of the poorest High Street Isas.

You can earn 5.25% through branches at Skipton, minimum £50, Barclays, minimum £1 (plus a 1 percentage point bonus), and NatWest if you have £27,000 in your account.

When base rate last stood at 5% in November 2006, Isa Saver account holders were earning a far higher 3.9% on balances up to £10,000 and 4.4% at £25,000.

The latest cut means these savers have seen a 0.8 percentage fall since the start of 2008, while base rate has only dropped by 0.5 points.

Web Saver account holders earn just 3.37% before tax (4.21% after savings tax) on balances up to £5,000, well below the top deals on offer (see Best Buys table above) where you can earn up to 5.2% (6.5%).

Other good deals include Yorkshire Building Society at 4.56% (5.7%) and Sainsbury's Bank at 4.4% (5.5%).

Halifax's Saver Reward pays just 1.22% (1.52%) at best on balances of up to £10,000 - and that is if you restrict yourself to three withdrawals a year. In Instant Saver you earn 1.34% (1.67%) at best on the same level of savings.

Halifax Monthly Saver account holders should ditch the account, which pays just 3.61% (4.5%), as soon as they have their annual bonus. They should move into a toppaying internet or cash Isa.

Halifax runs a Fixed Rate Monthly Saver paying 8% (10%), available until July 20.

High interest bank account for over-50s

Heritable Bank has launched a telephone and postal account with a top rate of interest open to those aged 50 or over.

It currently pays 5.05% after 20% savings tax (6.31% before tax) on a minimum £1,000 and comes with a valuable guarantee that you will earn at least Bank of England base rate, currently 5%, plus 0.25 percentage points for the life of the account.

The decent interest rate plus the guarantee means that it has joined our Best Buys table this week (see right).

It is open to joint account holders as long as one or more of those named is age 50 or over. But you are limited to six withdrawals a year. After that you lose 30 days' interest on any money withdrawn.

It replaces Bradford & Bingley's My Timesaver account which, at 4.6% (5.75%), is still an attractive deal, and we will continue to track it. Those in Halifax Guaranteed Saver, an attractive

High Street account, have seen a 0.25percentage point before-tax cut this week and now earn 4% (5%), down from 4.2% (5.25%).

It is the first cut since Bank of England base rate fell by the same amount in April.