The high street bank is keeping competition fresh in the savings markets as others cut interest rates in the wake of the Bank of England base rate drop
Lloyds Bank is luring Brits with a competitive 6.25% interest rate on its regular savings account, despite many providers cutting rates following the recent Bank of England Base Rate reduction to 4%. Following the base rate decrease, over 20 savings account providers have passed on the change to their customers across easy access, notice, Cash ISAs, Junior ISAs and children’s savings accounts.
Not every provider has passed on the 0.25% cut, some have reduced their own rates by less while others have gone to the extreme and have taken off even more from their interest rates. But amidst the fluctuating savings accounts, Lloyds is standing out with its leading 6.25% rate.
This is specifically for its regular savings account which has a few more requirements and criteria savers need to adhere to than your typical easy access account. For the Lloyds offering, savers need a minimum deposit of £25 and must be Club Lloyds current account holders.
Savers also need to have one standing order depositing money into the account every month as reported by the Daily Express. This can be between £25 and £400 for the 12-month term.
Unlike most regular accounts, there is no limit on withdrawals but savers will need to keep the £400 limit in mind when taking money out of their account. For example, if you deposit £400 into the account and in the same month you withdraw £100, you won’t face penalties for this in any way, but you also won’t be able to deposit any additional funds into the account that month to make up for what you took out.
If you put away the maximum £400 every month without making any withdrawals, you’ll accumulate £4,800 by year’s end plus £150 in interest based on current rates, according to the Daily Express. People who have opened a Club Lloyds Monthly Saver account within the past 12 months cannot open another until their existing one expires. The 6.25% AER interest rate remains locked for the complete 12-month period.
For those without a Club Lloyds current account who are seeking to open a regular savings account, Principality Building Society provides the leading rate of 7.5% Annual Equivalent Rate (AER). The account operates for six months, with interest paid when it matures.
You can deposit up to £200 monthly into the account, enabling your savings to reach a maximum of £1,200. With the monthly limit of £200, savers will conclude with £1,227.53, incorporating £27.53 in interest. However, withdrawals aren’t allowed until the account reaches maturity.
Following the Bank of England base rate reduction, more than 20 providers have slashed their variable savings rates according to Moneyfactscompare.co.uk. Consequently, the average savings rate has fallen to 3.48%, but with inflation forecast to climb to 4% this year, savers might witness their funds being eroded over time.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said: “Savers will feel frustrated to see an abundance of providers cut rates since the Bank of England Base Rate cut. As more than a dozen brands cut by the end of last week, it’s only got worse, as over 20 providers have now cut since last Thursday, showing how quickly cuts are passed on to hard-pressed savers.
“It is essential consumers stay in tune with market movements and switch to ensure they are not getting a raw deal. In the coming weeks more savings providers will need to decide whether to pass on the 0.25% cut, but as we have seen over the last few days, sometimes they can cut by bigger or smaller margins.”