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Savings account rates slashed by one in 10

05 November 2009 / by Rebecca Sargent

Interest rates on 10 per cent of variable savings accounts have been reduced since March this year, despite the Bank of England's Base rate remaining unchanged.

According to analysis from Moneyfacts.co.uk, a number of leading savings account providers have slashed their variable rates by as much as 0.86 per cent in the last eight months.

Base rate has remained at 0.5 per cent since it was first cut to the record low in March this year, but savings account providers have continued to cut their rates.

In fact, in the last month alone, 3.9 per cent of all savings accounts have cut their interest rates, including leading high street names Bank of Scotland, Halifax and Clydesdale Bank.

The reductions in savings rates mean that 48.8 per cent of all variable savings accounts now pay base rate or less, while 22.8 per cent pay 0.10 per cent or less.

Commenting, Michelle Slade, spokesperson for Moneyfacts.co.uk said: "Savers are already experiencing some of the lowest rates ever and this will be another bitter blow to take.

"Once again it is savers, such as pensioners, who rely on the income from their savings to supplement their income, who end up worse off.

"Savers will be asking how providers can justify cutting rates further, when bank base rate has remained on hold," she added.

The latest figures come ahead of new Financial Services Authority (FSA) regulations that will come into play in November, and mean that providers must give two months notice ahead of disadvantageous interest rate changes.

"Savers need to ensure they review the rate they are receiving regularly and switch accounts if it is no longer competitive," Ms Slade warned.

© Fair Investment Company Ltd