THOUSANDS of Barclays customers are set to see a major change to their bank accounts today.
The high street bank has lowered the interest rate on its Rainy Day Saver account from 4.87% to 4.61%.
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It marks the second time the bank has decreased the savings rate on customer accounts in the last four months.
The cut comes ahead of the Bank of England‘s next interest rate decision on Thursday.
Markets have already priced in another base rate cut, with a roughly 90% chance of it going ahead.
The base rate is the rate at which the Bank of England charges other banks and lenders when they borrow money, and it influences the interest rates that banks set on mortgages and savings accounts.
It’s widely expected the base rate will be cut from 4.5% to 4.25% this week.
Experts are also expecting a further three base rate cuts this year.
Because these cuts are already being priced in, we’re currently seeing decreases to interest rates on both mortgages and savings accounts.
That means it’s a good time for home buyers and movers – but savers are getting the short end of the stick.
Barclays‘ Rainy Day Saver account previously had an impressive interest rate of 5.12%, but this was cut by the bank in February.
Even with the rate cut, the Rainy Day Saver is still a pretty good option.
It’s the highest interest rate among big name banks, with Santander-owned Cahoot offering the closest at 4.41%.
Marcus by Goldman Sachs has a rate of 4.3%.
If you’re happy to try a smaller bank, Chip and Sidekick both offer rates of 4.76% – beating the Barclays account.
Sidekick offers unlimited withdrawals, but there are limited withdrawals with Chip.
Other major banks have recently slashed their savings rates.
Virgin Money will lower the interest rate on its M Plus Saver account by 0.25 percentage points on June 16.
Currently, customers benefit from an interest rate of 2.5% on savings up to £25,000.
Therefore if you have £5,000 in savings, you would earn £125 in interest over the course of a year.
But once the rate drops to 2.25%, the same £5,000 savings will generate £112.50 in interest annually – £12.50 less than before.
Chase also reduced the rate on its standard Saver account from 3.25% to 3%.
Where to find the best savings rates
Many savings accounts offer miserly rates meaning that money is generating little or no return.
However, there are ways to get your cash working hard. Sun Savers Editor Lana Clements explains how to make sure you money is getting the best interest rate.
Easy access savings accounts offer flexibility for customers, meaning they can dip in and out of cash when needed. However, the caveat is that rates can change at any time.
If you’re keeping your money in an easy access account, you’ll need to keep checking whether it’s the best paying account for your circumstances and move if not.
Check in at least once a month to see what is happening in the market.
Check what is offered by your bank – sometimes the best rates are for customers only.
But do search the wider market as often top savings accounts are offered by lesser known providers.
Comparison sites are a good place to check for the top rates. Try Moneyfactscompare.co.uk or Moneysupermarket.
You can search by different account type. You’ll usually get a better interest rate if you can lock your money away for a fixed amount of time, but it’s always a good idea to keep some money in an easy access account in case of emergencies.
Don’t overlook regular savings accounts often pay some of the best rates, but you’ll need to commit to monthly payments. This can be a great way to get into a savings habit while earning top rates at the same time.
