Savers suffer all pain and no gain

https://www.theguardian.com/money/2016/nov/13/savers-suffer-pain-no-gain

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If you thought things couldn’t get any worse for savers, think again. During October there were 240 rate cuts as banks and building societies withdrew many top-paying accounts.

Financial data firm Moneyfacts says 23 best-buy savings deals were withdrawn during the month, and some of the best new deals on the market were only available for a few days.

Savers’ options were slim even before the Bank of England cut its base rate to 0.25% in August, but they’ve since taken a further hit. Among the top deals to go were the five-year fixed-rate bond from Yorkshire bank which was paying 2.08%, and the 1.5% 12-month-notice account from Raphaels bank. Hodge bank’s popular 90-day notice account, which paid 1.3% for deposits of £10,000 plus, is another no longer accepting applications.

Rachel Springall from Moneyfacts says there’s no end in sight for the cycle of cuts and withdrawals. “Cuts have clearly engulfed the market, but what’s worse is the fact that some of the best deals are being withdrawn at an alarming rate,” she says. “Making countless cuts to a savings range is just not practical, which is why providers are resorting to closing some of their most attractive deals to cope with demand. With deals disappearing so rapidly, it’s more important than ever for savers to look at the best-buys and act fast in opening a new account if they want a top rate.”

The SavingsChampion website, which also monitors rates, says most banks and building societies seem to be “trying to escape from the best-buy tables rather than enter them”. It is pointing savers towards Secure Trust Bank, which has launched a five-year fixed-rate bond paying 2.01% on balances of more than £1,000.

Charter bank, meanwhile, has launched a two-year fixed-rate bond paying 1.51%, also with a £1,000 minimum and the option for monthly interest. The best instant access online rate is a paltry 1%, available from National Counties building society, RCI bank and NS&I.

These rates are all better than those on offer to some savers. Data from the Bank of England shows the average interest rate on instant access accounts dropped from 0.3% at the end of July to just 0.22% by the end of October, with more cuts to existing accounts still filtering through.