A MAJOR bank has confirmed that it will cut the interest rate offered on its top easy access savings account.
Santander is slashing the rate offered on its off-sale, variable rate Easy Access Saver Limited Edition (Issue 3) account.
GettyThe move gives customers plenty of time to consider switching accounts[/caption]
It currently pays savers 5.20% on balances between £1 and £250,000.
However, on May 20, the rate offered will fall by a whole percentage point to 4.20%.
From today (March 8), Santander will contact all affected account holders to provide them with two months’ notice of the new rate.
All other terms of the account, remain the same and customers can access their money at any time with no charges.
The retail bank blames the reduction of the savings rate on current market conditions.
A Santander spokesperson said: “Santander regularly reviews product rates to ensure that we continue to help our customers make the most of their money in a way that is sustainable in the changeable wider market conditions.
“Our Easy Access Saver Limited Edition (Issue 3) customers will continue to benefit from our best easy access rate of 4.20% from May.”
Should I move my money to get a better rate now?
For now, the account remains top-paying for those with savings between £1 and £25,000, according to MoneyFactsCompare.co.uk.
Cahoot’s Sunny Day Saver (Issue 1) pays 5.2% interest on savings between £1 and £3,000.
So if you were to save £1,000 across the year you’d earn £52 in interest if you didn’t make a withdrawal.
Virgin Money offers the next best easy access rate available with its Defined Access E-Saver Issue 21.
Savers get 5.11% back on deposits between £1 and £250,000.
This means for every £1,000 you save you’ll get back £51.10.
However, if you make more than three withdrawals in a year the interest rate will temporarily drop to 2%.
Cynergy Bank’s Online Easy Access Account (Issue 69) offers savers 5.1% interest back on deposits between £1 and £1million and Hampshire Trust Bank’s Online Easy Access Account (Issue 18) offers 5.09% back on savings between £1 and £250,000.
Martyn James, personal finance expert, said: “Switching accounts can be a great way to make some money or earn some extra cash, but the devil is in the detail.
“Pretty much all switching deals can be withdrawn at any point.
“But more importantly, they all come with catches. You may need to have your wages paid into the account or a certain amount of money going through it each month.”
How do I find the best savings rates?
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what’s out there.
These websites let you tailor your searches to an account type that suits you.
There are four main types of savings accounts fixed, notice, easy access, and regular saver.
According to data supplied by Moneyfacts, the top-paying easy-access savings rate is currently 5.2%.
An easy-access account does what it says on the tin and usually allow unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
Notice accounts work in a similar way, but your cash can be locked away for shorter periods as it just requires savers to give notice before they make a withdrawal.
The top one-year fixed bond rate currently stands at 5.28%, and the top-paying notice account at 5.45%.
Lastly, there is a regular saver account. These accounts generate decent returns, but only if you pay a set amount each month.