Big bank with six million customers to SLASH savings rates on popular account within weeks affecting thousands
A BIG bank with six million customers is slashing the savings rate on a popular linked current account product within weeks.
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.
For instance, if you have £5,000 in savings, you would earn £125 in interest over the course of a year.
However, once the rate drops to 2.25%, the same £5,000 savings will generate £112.50 in interest annually – £12.50 less than before.
For customers with savings exceeding £25,000, the current rate stands at 2%.
This means that someone with £25,100 in savings would earn £502 in interest after 12 months.
However, this rate is also being reduced.
From 16 June, the interest rate on savings above £25,000 will fall to 1.75%.
Any customer with an M Plus current account can open an M Plus Saver.
It is an easy-access account with no restrictions on withdrawals, offering flexibility for savers.
However, savers could still earn more by moving their money to Atom Bank’s easy access saver, which pays 4.75% interest with a minimum deposit of just £1.
What are the best savings rates?
There are four types of savings accounts fixed, notice, easy access, and regular savers.
The rates offered on each of these accounts vary, but we’ve rounded up the best available right now.
If you’re looking for a savings account without withdrawal limitations, then you’ll want to opt for an easy-access saver.
These do what they say on the tin and usually allow for unlimited cash withdrawals.
The best easy-access savings account available is from Atom Bank, which pays 4.75% – and you only need to pay a minimum of £1 to set it up.
This means that if you were to save £1,000 in this account, you would earn £47.50 a year in interest.
If you’re looking to grow your savings and don’t need regular access to your funds, a fixed-term bond or notice account could be a better option.
The best notice accounts offer slightly higher rates than the best fixed-term bonds.
These also come with more flexibility when accessing your cash.
For instance, Oxbury Bank’s 120 day notice account offers savers 4.85% back with a minimum £100 deposit.
The best fixed rate currently offered is Castle Community Bank’s one-year fixed bond, which pays 4.68%, requiring a minimum investment of £1,000.
If you want to build a habit of saving a set amount of money each month, a regular savings account could pay you dividends.
Principality Building Society’s Six Month Regular Saver offers 7.5% interest on savings.
It allows customers to save between £1 and £200 a month.
Save in the maximum, and you’ll earn 25.81 in interest.
While regular savings accounts look attractive due to the high interest rates on offer, they are not right for all savers.
You can’t use a regular savings account to earn interest on a lump sum.
The amount you can save into the account each month will be limited, typically to somewhere between £200 and £500.
Therefore, if you have more to save, it would be wise to consider one of the other accounts mentioned above.
FINDING THE BEST SAVINGS RATES
WITH your current savings rates in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
Research price comparison websites such as MoneyFactsCompare.co.uk and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you’ll want to consider any account that currently pays more interest than the current level of inflation – 2%.
It’s always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you’re saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.