Although savings rates have yet to get into negative territory, banks and building societies continue to chip away at the interest they are prepared to pay their customers.
According to Anna Bowes at Savings Champion, savers with money in more than 60 variable paying accounts have seen their rates trimmed this month. Not as many as the 590 cuts made in April in response to the double reduction in Bank Base rate, but the reductions keep coming – 24 already scheduled for this month.
Metro Bank is the latest to reduce the peanuts it is paying. It has just informed savers that come the New Year, interest rates on three popular accounts will be trimmed.
Taking a hit: Savers with money in more than 60 variable paying accounts have seen their rates trimmed this month
The rates on its instant access account and its instant access Cash Isa will be halved to 0.1 per cent and 0.15 per cent respectively while interest on Young Savers (available to those aged 21 or under) will fall from 1.1 per cent to 0.75 per cent.
The new rates are not as derisory as some being paid on equivalent accounts run by rivals.
For example, most high street banks are paying 0.01 per cent interest on instant access accounts – a miserly £1 of interest a year on £10,000 of savings.
Yet Metro’s move is a sign of the times. Banks know many people are determined to keep saving – and are not particularly deterred by rate cuts. So cut away they do.
The banks are also hunkering down to protect their revenues and profits against the economic maelstrom heading our way.
It’s why they are also keen to hit us with monthly fees on our current accounts – as we debate on the opening pages of Personal Finance.
Thrift may be the order of the day right now for most households, but just don’t count on the banks to help you.
While many households’ finances are stretched to near breaking point – and will come under yet more pressure as a number of forbearance measures came to an end yesterday (see below) – there are other households who still have sufficient disposable income to continue investing for the future.
For these long-term investors, 2020 has been a rollercoaster ride with the sharp stock market falls of March ameliorated by a strong bounce back.
Yet with another national lockdown being called for by some (not all) scientists, equities have once again got jittery. As a result, the FTSE100 and FTSE All-Share are down 27 and 25 per cent respectively on the start of the year.
While we are living in extraordinary times and the future is an unpredictable one, UK equities look cheap. If you’re investing on a regular basis – through an Isa or pension – keep plugging away. Long-term thrift pays.