Hundreds of savings accounts have cut their interest rate after base rate drop
Banks and building societies have adjusted their interest rates to reflect the Bank of England’s decision.
The Bank of England’s decision to drop the base rate to 5% was bittersweet in many ways.
It was good news for borrowers - as mortgage rates should now start to decrease, although providers have been slow to act on this…
On the other hand, it was sad news for savers, as the drop would mean lower rates on savings accounts. Unsurprisingly, providers were much quicker to start dropping their rates here.
Since the announcement last week, 229 savings accounts have cut their interest rate varying from a 1% decrease to a very minor 0.02% drop.
Santander’s Edge Saver for existing customers has seen the biggest decrease (so far!), as this went from 7.00% to 6.00%. Elsewhere, Shawbrook dropped the interest rate on many of its fixed-rate products. For example, its two-year fixed-rate cash ISA has gone from 4.64% to 3.78%, which is a decrease of 0.86%.
Looking at the entire list of savings accounts, fixed-rate accounts are the most affected. This is because fixed-rate accounts guarantee the interest for a specific period of time, some for many years.
It’s predicted the Bank of England will continue to drop the base rate this year, so if someone is locking in an interest rate for the next year - or two - providers have to consider this.
That being said, most types of savings accounts are featured on the list - from instant access to notice and cash ISA. This means many savers will be feeling the impact of the base rate drop.
But it isn’t all bad news, as for now, interest rates remain competitive. Providers are still offering rates around 5%, which is still a lot higher than in previous years. This means savers should try to compare savings accounts and move their money if they are earning little to no interest.
There are still plenty of banks and building societies that are offering lower than average rates, so if this sounds familiar, it’s important to look at the whole market to ensure that you aren’t missing out on extra cash.
Now is the time to act, as anything could happen at the next Bank of England meeting in September.
Top 20 providers that have cut the interest rate on savings
| Savings account | Previous interest rate | Current interest rate | % change in interest |
|---|---|---|---|
| Santander Edge saver (Issue 1) Ex/C | 7.00% | 6.00% | -1.00% |
| Shawbrook Bank 2 Year Fixed Rate Cash ISA Bond Issue 86 | 4.64% | 3.78% | -0.86% |
| Raisin UK FidBank UK - 2 Year Fixed Term Deposit | 4.93% | 4.26% | -0.67% |
| Aldermore 18 Month Fixed Rate Bond | 4.55% | 4.10% | -0.45% |
| Hargreaves Lansdown Active Savings OakNorth Bank Plc - Easy Access ISA | 4.68% | 4.25% | -0.43% |
| Castle Trust Bank Notice e-Saver | 4.90% | 4.50% | -0.40% |
| Leeds Building Society 2 Year Fixed Rate Bond Issue 592 | 4.55% | 4.15% | -0.40% |
| Tandem 18 Month Fixed Saver | 4.80% | 4.40% | -0.40% |
| RCI Bank 3 Year Fixed Term Savings Account | 4.76% | 4.00% | -0.36% |
| Allica Bank 6 Month Fixed Term Savings Account (Issue 31) | 5.15% | 4.80% | -0.35% |
| Monument Bank Easy Access Savings | 5.03% | 4.70% | -0.33% |
| Raisin UK Isbank UK - 6 Month Fixed Term Deposit | 5.17% | 4.86% | -0.31% |
| Charter Savings Bank 1 Year Fixed Rate Bond | 4.85% | 4.55% | -0.30% |
| OakNorth Bank Personal 36 Month Fixed Term Deposit | 4.29% | 4.00% | -0.29% |
| Zopa Smart ISA Access ISA Pot | 5.08% | 4.80% | -0.28% |
| Wombat Invest GB Bank - Base Rate Tracker | 4.91% | 4.64% | -0.27% |
| Hodge Bank 3 Year Fixed Rate Account/Bond | 4.72% | 4.45% | -0.27% |
| Virgin Money Private Savings Account Ex/C | 5.61% | 5.35% | -0.26% |
| Raisin UK UBL UK - 5 Year Fixed Term Deposit | 4.52% | 4.26% | -0.26% |
| Saga Easy Access Savings Account | 4.55% | 4.30% | -0.25% |
Note - these providers dropped the rates on many of their accounts, so we’ve selected one account as an example from each provider.
Data from Defaqto and money.co.uk, includes interest rate changes from August 1 to August 8, 2024 to reflect the market after the base rate dropped to 5%. Includes area restrictions and existing customer deals. No children savings accounts.
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About Lucinda O'Brien
As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.