Marcus is making another cut to its easy-access account as savings providers continue to slash rates on the back of brutal cuts by National Savings & Investments.
The UK savings arm of Goldman Sachs will cut its easy-access rate from 0.7 per cent to 0.5 per cent in just over a fortnight on 11 December, just two months after it cut the rate from 1.05 per cent.
It made that September cut, its deepest ever, just days after NS&I announced it was reducing rates on its easy-access accounts to as low as 0.01 per cent, and news of the latest rate reduction comes in the same week as those cuts were introduced.
Marcus has made the second cut to its easy-access account in the last 2 months. It will pay savers just 0.5% interest from 11 December
First Direct and HSBC also handed savers a cut of 1.75 percentage points on its regular saver earlier this week.
It means Marcus’ account, which paid as much as 1.5 per cent for a year after it was launched in September 2018, now fails to beat inflation, which rose to 0.7 per cent last month.
The bank, which took in roughly £1billion a month from savers when it launched its then market-leading account two years’ ago, previously reduced its rates to 1.45 per cent and then 1.3 and 1.2 per cent in recent months, while it also removed the account from sale to new customers in June this year.
It said in a statement: ‘Since the Bank of England’s base rate was reduced to its lowest level on record earlier this year, interest rates across the savings market have continued to fall.
‘We have to keep these market conditions in mind and adjust our interest rates in response to ensure we remain a sustainable savings business for the long term.’
Rate cuts elsewhere saw savers pile into the account, but those lucky who were lucky to get in have now faced a succession of cuts themselves.
The quick-fire cut in just over two weeks’ time comes after it changed its terms and conditions last October to allow it to give customers just 14 days’ notice ahead of any rate cut, where before it let them know two months’ beforehand.
It hoovered in so much cash from UK savers that it had to close its doors in June to new customers – it had raked in £21billion, making it close to breaching banking rules.
And Marcus, whose parent bank was bailed out by the US taxpayer during the last financial crisis in 2008, is not the only provider to hand savers a succession of bad news in the last few months.
When it announced its cut from 1.05 per cent to 0.7 per cent at the end of September, the best buy easy-access stood at 1.1 per cent and five highest-paying accounts paid an average of 1 per cent, according to Savings Champion.
Today, the best buy rate has dropped to 0.7 per cent and the top five average to 0.6 per cent, while easy-access rates overall pay as little as 0.21 per cent on average, according to separate analysis from Moneyfacts.
Savings banks have been inundated with money since NS&I’s announcement of its rate reductions two months’ ago, filling up their books and requiring them to slash rates as a result.
|Date||Best buy easy-access rate||Top 5 easy-access average rate|
|Source: Savings Champion|
Challenger bank Paragon, which removed its 0.65 per cent paying easy-access account from sale this week, said September was its busiest ever month as deposits flooded out of NS&I ‘at an unprecedented rate’.
This was even despite the fact that many people who tried to withdraw money from NS&I had, and continue to have, problems doing so.
Paragon Bank’s savings direct, Derek Sprawling, said he anticipated billions more pounds would continue to inundate the market as savers looked for the best rates, even if those rates were much lower than they had been previously.
Saga, which has its easy-access account provided by Marcus, has also cut its rate from 0.7 per cent to 0.5 per cent, although that comes with a 0.1 percentage point bonus which expires after a year.
James Blower, an advisor to savings banks and founder of The Savings Guru, said savings rates were ‘collapsing generally as the NS&I cuts take effect.’
He added: ‘We’ve seen a second wave in the savings market caused by the NS&I interest rate reductions. The market went quiet at the end of October, and in the first couple of weeks of November, but the cuts continued last week.
‘In the past 48 hours, with the NS&I rate cuts being implemented, the two of the top three easy-access buys have gone, all the top three best one-year fixed rates have been cut and the best notice account has been reduced. Many NS&I savers have hung on to the last minute, knowing the pre-cut rates could not be beaten and are now moving.’