Savers are being warned that loyalty to their account provider does not pay, following Thursday’s base rate cut.
According to financial information website Moneyfactscompare.co.uk, the average easy access savings rate on the market at the start of February was 2.92%, down from 3.17% a year earlier.
The Bank of England base rate was cut by 0.25 percentage points to 4.5% on Thursday, sparking calls for savers to shop around to grab the top deals while they can.
It has already been proven that cuts to the Bank of England base rate set the wheels in motion for the biggest banks in the country to cut rates, showing loyalty does not pay
Rachel Springall, Moneyfacts
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Savers who rely on their cash savings to boost their income are at the mercy of lower interest rates.
“It has already been proven that cuts to the Bank of England base rate set the wheels in motion for the biggest banks in the country to cut rates, showing loyalty does not pay.”
Andrew Hagger, founder of Moneycomms.co.uk, said: “Savers will see easy access savings rates edging lower, so should check out the best buys and switch to a better rate if their bank is offering a sub-standard deal.
“If you’re thinking of putting some cash away for a year or two in a fixed-rate bond or Isa, now would be a sensible time to lock in at current levels while you still can.”
Sarah Coles, head of personal finance, Hargreaves Lansdown, said the rate cut could “blow some of the froth off the easy access cash Isa market”, which she said “has been incredibly competitive recently, with plenty of banks offering more on easy access cash Isa then their equivalent savings accounts”.
“We could see the number of deals over 5% pull back, despite the fact that we’re heading firmly into the traditional Isa season.”
The reduction also comes at a time when Starling Bank is set to remove the interest rate paid on personal and joint current accounts on February 10. People can still earn interest on balances up to £5,000 until that date.
The bank has launched an Easy Saver, which customers can make deposits in from their personal current account, earning 4% AER (annual equivalent rate) variable on balances of up to £1 million. A rate of 3.25% AER has been paid on balances up to £5,000 on its current account.
Starling said customers were notified in November 2024 and can still benefit from the account’s other features.
All Starling Bank personal current account customers can apply for an Easy Saver account, with the ability to open one being subject to meeting eligibility criteria.
Alastair Douglas, TotallyMoney chief executive officer, said: “Just remember that loyalty doesn’t pay, but moving your money can.”
