The high street giant cut the interest rates on 11 of its savings accounts on August 11. Despite homeowner relief on mortgage rates, this will likely result in smaller saver returns
Santander has made a significant change to nearly a dozen accounts this week, impacting thousands of savers. The high street giant reduced the interest rates on 11 of its savings accounts on August 11.
This follows the Bank of England’s decision in May to lower its base rate from 4.5% to 4.25%. While this decision was a relief to millions of homeowners with variable rate mortgages, which fluctuate with the base rate, it often results in smaller returns for savers.
Consequently, Santander has reduced the interest rates on almost a dozen accounts this week. It comes after thousands of Brits to get shock letter from HMRC after drastic new tax rule comes into force.
Among those affected are the Easy Access Saver (Issue 26 and 27), which have seen their interest rates drop from 1.3% to 1.2%, reports The Sun.
Note that if you had previously deposited £2,000 into this account, you would have earned £26 after one year. However, with the rate now at 1.2%, you will earn £24 – a difference of just £2.
Several ISA accounts have also seen their rates cut. Among them is the Easy Access ISA (Issue 22 and 23) which has also seen its rate fall from 1.3% to 1.2%. The interest rate on the Help to Buy ISA will also be cut from 2.45% to 2.35%. This would mean the amount of interest you could earn on a £2,000 deposit after one year would fall from £49 to £47.
Children’s accounts have also been affected by the interest rate changes, with the rate on a Junior ISA being cut from 2.8% to 2.7%. Additionally, the interest rate on a Flexible Saver for Kids has dropped to 1.95%, falling from 2.05%.
The Inheritance ISA interest rate has been cut from 2.85% to 2.7%, whilst the First Home Saver has witnessed its return decline from 2.45% to 2.35%.
All these accounts feature variable interest rates, meaning the rate can fluctuate upwards or downwards. Those account holders affected by these modifications will have received a notification of the changes back in June. Thankfully, the major bank continues to provide returns of up to 5% on its Regular Saver account.
The bank’s spokesperson commented: “We are committed to delivering value for our savings customers and offer a range of competitive savings products”.
On average, savers have approximately £9,633 stashed away, according to online savings platform Raisin, making it crucial to ensure you’re securing the best return. Therefore, you should always shop around between different accounts to guarantee you’re maximising your money.