Savings account interest rates slashed by up to 4%

22 December 2008 / by Rebecca Sargent
As many as 76 savings providers have cut interest rates on accounts by up to four per cent following base interest rate cuts to two per cent, research from uSwitch.com has revealed.

Since November, interest rates in the UK have fallen by 2.5 per cent, however, in that period interest rates on savings accounts have been cut by up to four per cent on more than 150 products.

Since the December base rate cut alone, 47 providers have decreased rates on 100 savings products by as much as 2.2 per cent when the rate cut was only one per cent.

Commenting, personal finance manager at uSwitch.com, Louise Bond said: "Despite the Government's best intentions to reduce the base rate and fuel the economy, unwittingly they have actually provided a smokescreen for savings providers to slash rates as often and by as much as they please.

"December has been a particularly bad time for savers, with what feels like the fallout of three base rate decreases. Unfortunately these low rates are not encouraging consumers to save at a time when every penny counts."

In fact, a study from Alliance & Leicester has found that 13.5 million (28 per cent) Brits failed to save a penny throughout 2008 as household budgets are stretched further and further.

However, 64 per cent of Brits have managed to keep some money aside. Hetal Parmar, manager for savings at Alliance & Leicester said: "At the end of a rollercoaster year, it's encouraging to see a good proportion of Brits developing a disciplined savings habit by saving regularly."

Advising those who have failed to save he added: "The New Year is a great starting point for new savers, even putting away £10 a week will soon start to add up."

Despite news of falling interest rates, there are a few deals around that continue to offer high rates, including the Alliance & Leicester eSaver with a rate of five per cent, and the Halifax International Fixed Rate Web Saver which currently gives a return of four per cent.

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