Savings rates 'fall faster than base rate'
Saturday, 20 Dec 2008 00:01
Savings providers are cutting interest rates
Savings providers are cutting the
interest rates on products faster than the Bank of England is reducing the base rate, research shows.
Analysis from uSwitch.com found 76 providers have dropped rates by as much as four per cent on over 150 products, despite the base rate falling by just three per cent in three months.
Following the December 4th base rate decrease, 47 providers decreased rates on 100 savings products by as much as 2.22 per cent - 1.22 per cent higher than the Bank of England's decrease.
Louise Bond, personal finance manager at uSwitch.com, said: "Despite the government's best intentions to reduce the base rate and fuel the economy, unwittingly they have actually provided a smokescreen for savings providers to slash rates as often and by as much as they please.
"For consumers that can afford to lock their money away for 12 months, a fixed rate savings account is the best option."
Variable rate products seem to have taken the biggest hit between December 1st-4th, uSwitch said.
A total of 13 providers decreased variable savings rates by more than 1.5 per cent, an average cut of 1.74 per cent which is 0.24 per cent higher than the November base rate decrease.
The highest cut within this group was 2.5 per cent, uSwitch said.