Savings update: interest rate cut will be bad news for savers

4 July 2016

Savers could face lower interest rates this summer. Last week Mark Carney, governor of the Bank of England, hinted that base rate could be cut from its current 0.5% to 0.25% in July or August.

Currently the top paying one-year fixed rate bond comes from online provider Charter Savings Bank at 1.79% before tax (1.43% after tax) or, on the high street, 1.5% (1.2%) from Co-op Bank's Britannia Bond.

For two years Charter Savings Bank pays 1.91% (1.53%) while the rate at Co-op Bank is 1.6% (1.28%).

The top easy-access rate is 1.45% (1.16%) from French-owned RCI Bank's Freedom account. Your money is covered by the pan-European Union deposit protected scheme rather than your home-grown Financial Services Compensation Scheme.


Top cash Isa rates

Virgin Money Defined Access Saver pays 1.26% (1.01%) but you are limited to making three withdrawals a year on this account.

If you make more your rate tumbles to 0.5% (0.4%). Internet-based bank Shawbrook pays 1.25% (1%).

On tax-free cash Isas, the best easy-access rate comes from Coventry BS at 1.3% but you can't transfer your existing cash Isas into this account. Virgin Money Defined Access Isa pays 1.26% and accepts transfers.

On fixed rate cash Isas the top one-year rate is just 1.25% with Leeds Building Society. For two years you can earn 1.4% with Leeds Building Society, Virgin Money or Shawbrook Bank.

This article was originally written for our sister magazine, Money Observer.

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