Moneyfacts: 1 in 10 variable rates reduced

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Moneyfacts: 1 in 10 variable rates reduced

Thu 5th Nov 2009

Moneyfacts: 1 in 10 variable rates reduced

Despite the base rate of interest remaining the same since March, one in ten banks has reduced their variable savings rates, according to Moneyfacts.

Currently, 48.8 per cent of all variable-rate accounts pay the bank rate or less and 22.8 per cent pay customers 0.1 per cent on their savings.

In the last month, 3.9 per cent of banks have made reductions in their interest rates, ranging from between 0.05 per cent up to 0.86 per cent.

The independent financial advisor found that by contrast, only 3.5 per cent of accounts have had their rates increase as institutions try to attract more savers.

Michelle Slade, spokesperson for Moneyfacts, said the cuts are another bitter blow for savers already experiencing low returns on their investments.

At the beginning of November, new regulations were introduced meaning that banks had to give two months' notice of any changes disadvantageous to their customers.

"It appears that a number of providers have pre-empted these changes and reduced rates before the new rules came into force," said Ms Slade.

Moneyfacts reported in September that banks were targeting savers with fixed-rate accounts with five-year deals. The company found though that most savers were only looking for two-year commitments.

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