The nation’s banks and building societies have gone on a rampage over the past week, slashing headline rates left and right and leaving savers with little choices in an economic landscape that includes runaway inflation.
One of the biggest cuts was the Flexclusive ISA from Nationwide dropping from 4.25 per cent down to 3.5 per cent. However, savers who have already taken out the branch-based account will retain the more lucrative interest rate, provided they continue paying in £750 a month into their Nationwide current account.
Northern Rock’s new masters, Virgin Money, dropped the rate of return on their easy access savers down to 2.6 per cent for new customers. Likewise to the Nationwide deal, any Northern Rock customers who took out the account under the wire retain the original 2.85 per cent rate of return.
Other savings providers have not only pared back the rates on their offerings but have eliminated some altogether. AA Savings pulled the rug out from under new customers who were interested in taking out its 3.5 per cent ISA in addition to reducing the interest rate on its 2.8 per cent easy access saver by 0.4 percentage points, and Sainsbury’s also slashed the rates on two of its easy access savers as well, with new customers earning much less than they did before.
Sainsbury’s reduced one of its savings products down to 2.7 per cent, a drop of 0.2 percentage points, while another of its offerings dropped only slightly by 0.1 percentage point to 2.5 per cent. However, all of these interest rates are much below the current 3.5 per cent inflation rate gripping the country, which means that little actual progress is being made by savers who are trying to make real savings.