Bank account change for thousands of Barclays customers coming in WEEKS and you could be worse off
BARCLAYS is making a big change to two of its bank accounts that could leave customers worse off.
The bank which caters to over 20million UK customers is slashing interest rates on several popular saving accounts.
Barclays is set to cut interest rates on two of its easy-access savings accounts – the Everyday Saver and the Rainy Day Saver.
These accounts let you deposit and withdraw money freely, but the interest rate depends on whether you make withdrawals during the month.
The account changes will kick in from February 13.
The interest rate for the Everyday Saver is dropping from 1.51% to 1.26% on balances up to £10,000.
So, if you’ve got £5,000 in there, you’ll earn about £12.50 less in interest per year, making it around £63 instead of £75.50.
But, if you’ve got more than £10,000, the rate is actually going up from 1.16% to 1.26%.
The Rainy Day Saver, which is for Barclays Blue Rewards members and Premier Banking customers, is also seeing a rate cut.
For balances up to £5,000, the rate is going down from 5.12% to 4.87%.
If you’ve got £5,000 saved, you’ll get about £12.50 less in interest each year, earning roughly £243.50 instead of £256.
For balances over £5,000, the rate stays the same at 1.16%.
If you currently have money saved in any of these accounts, you might want to consider moving your money to a different account with a better interest rate.
High street banks often offer lower interest rates compared to newer online banks.
These challenger banks often have lower operating costs, allowing them to offer more competitive interest rates to attract customers.
Several providers are currently offering interest rates of up to 4.86% on their easy-access products.
What are the different types of savings accounts?
THERE are four types of savings accounts fixed, notice, easy access, and regular savers.
Separately, there are ISAs or individual savings accounts which allow individuals to save up to £20,000 a year tax-free.
But we’ve rounded up the main types of conventional savings accounts below.
FIXED-RATE
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
NOTICE
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don’t lock your cash away for as long as a typical fixed bond account.
You’ll need to give advance notice to your bank – up to 180 days in some cases – before you can make a withdrawal or you’ll lose the interest.
EASY-ACCESS
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
REGULAR SAVER
These accounts pay some of the best returns as long as you pay in a set amount each month.
You’ll usually need to hold a current account with providers to access the best rates.
However, if you have a lot of money to save, these accounts often come with monthly deposit limits.
Other savings cuts
It comes just weeks after Barclays cut interest rates on another two easy-access savings accounts, the Rewards Saver and Blue Rewards Saver.
The Rewards Saver now offers a 2.51% interest rate if no withdrawals are made during the month, down from 2.75%.
So, if you have £5,000 saved, you would have earned about £137.50 in interest per year before the change, and now you’ll earn around £125.50, roughly £12 less.
If a withdrawal is made, the rate temporarily drops to 0.76%, a reduction from 0.85%.
On £5,000, this means you’ll earn around £38 a year in interest, about £4.50 less than before.
The Blue Rewards Saver, which offers slightly higher rates and is only available to Barclays Blue Rewards or Premier Banking customers has also had its rates cut.
If you don’t withdraw any money during the month, the rate has fallen from 3.40% to 3.17%.
For someone with £5,000 in savings, this means a drop in annual interest from roughly £170 to about £158.50 – a difference of around £11.50 a year.
If you do withdraw money during the month, the interest rate has been lowered from 1.01% to 0.76%.
On a balance of £5,000, this reduces the annual interest from about £50.50 to around £38, a difference of about £12.50 a year.
The Blue Rewards Saver rates have been reduced from 3.40% to 3.17% when no withdrawal is made in the calendar month and from 1.01% to 0.76% when a withdrawal is made in the calendar month.
What’s next for savings rates?
Savings rates usually rise and fall with the Bank of England’s base rate.
This was cut for the second time in four years from 5% to 4.75% in November, but then rates were held at 4.75% in December.
The next interest rate announcement is on February 6.
If interest rates continue to fall, it spells bad news for savers, whose rates typically fall when the Bank’s rate is cut.
However, in the meantime, opting for a fixed bond can be a useful bet to help ride out future cuts to the base rate.
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.
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