Three top-paying easy-access accounts have disappeared over the past week, and I fear this marks a premature end to improving rates.
While deals on fixed-rate savings accounts have been falling dramatically, variable-rate accounts have held just about steady — until now.
But banks have started to withdraw the best deals from sale, including the account that has sat at the top of my best buy tables for more than three months.
Ulster Bank’s Loyalty Saver account, which paid a huge 5.2 per cent, vanished from general sale last week.
The fact that these accounts are no longer around takes the pressure off rivals to keep their deals high. And, in my experience, this is likely to trigger falls elsewhere.
Watch your own rates closely to make sure you don’t end up in a financial backwater if they are quietly cut.
Banks have started to withdraw the best easy-access deals from sale, including Ulster Bank’s Loyalty Saver account, which paid a huge 5.2%
You may find that your provider comes out with a new account that is similar to yours but with a better rate, as it looks to scoop up more money from new customers. In the meantime, your rate may be on a steady decline.
Banks and building societies have a nasty habit of chipping away at the rate they pay once accounts have been taken off the market.
They typically cut them by more than any fall in base rate and hope you won’t notice.
Conversely, if the Bank of England hikes interest rates, they will usually hand savers a meagre increase in the rate on these accounts, if at all.
But be on guard — it is also common for banks to cut rates (at any time!) even if there is no move in the general level of interest rates.
So which other accounts have been pulled? We also said goodbye to Metro Bank’s 5.22 per cent instant-access deal last week after being on sale for two months.
More than three-quarters of the Limited Edition Rate of 5.22 per cent offered is a bonus which is paid for 12 months. Once that disappears, your rate nosedives to 1.65 per cent. At this point you must move your money.
In its stead, Metro Bank last week launched a much lower 4.45 per cent including a year’s bonus of 2.8 percentage points. Do not be lured in; you can do better elsewhere.
If you opened the account between November 10 last year when it went on sale and January 15, you are still getting the 5.22 per cent — for now.
You will be given at least two months’ notice of any unexplained rate cut, but only 14 days if the cut is in response to a drop in the Bank of England base rate, so keep your eyes peeled. The good news is the base rate isn’t expected to change until May at the earliest.
Another top rate to go is the Dudley BS Easy Access Saver Issue 4. This paid 4.75 per cent and was a best buy for savers looking for a branch-based account.
It was withdrawn last week and replaced by Issue 5 for newcomers at a lower 4.25 per cent.
The quick succession of deal suspensions sparked whispers that others are likely to follow.
Ford Money is among the first to act in response and has cut its easy-access rate from 4.85 per cent to 4.6 per cent. This applies to existing customers, too.
It’s disappointing, but I wouldn’t switch from this account for a better rate just yet. Wait and see which other banks follow suit before making the leap.
Ford Money has earned itself a reputation for being among the top payers. I expect it to sit closer to the top of the table if rates elsewhere fall.
And it has always treated its customers fairly, paying the same rate to new savers and those already in the account.
Watch out for the illusion of bonus offers
Banks and building societies are relying on their old tricks — offering easy-access accounts and using smoke and mirrors to make them appear high up the internet best buy tables.
But they’re nowhere near as generous as they at first appear. They rely on short-term bonuses to jack up the interest you receive in the first 12 months — after which you end up with a pittance.
So it is essential to make a diary note of when your bonus runs out.
Cahoot Sunny Day Saver boasts a rate of 5.2 per cent.
However, after one year you’ll be moved into its Savings Account, where it pays a measly 1.2 per cent.
If you stay put, your interest will drop from £52 on each £1,000 you have in savings to £12 a year.
Other huge bonuses come from Tesco Bank, where the initial 4.75 per cent drops to 1.25 per cent; Post Office Online Saver’s 4.7 per cent dips to 1.55 per cent; and Halifax Bonus Saver’s 4.1 per cent goes to 1.45 per cent.
Money Mail does not include accounts which come with a bonus in our best buy tables.
The top easy-access account from Charter Savings Bank pays 5.13 per cent on £5,000 or more, so no messing round with a bonus.
Family BS is good, too — it pays 5.04 per cent on its Online Saver on £100 or more.
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