How can you get the best interest rates on your bank account?
Published 30 August 2012 by Helen Gradwell
Savers must act quickly to get the best returns on their bank accounts.
The Telegraph has reported that many banks and building societies are withdrawing their 'top-paying' savings accounts - and many are expected to cut their rates by the end of the week.
Kevin Mountford from MoneySupermarket.com said: "We are starting to see a softening of savings rates across the board, despite there being no corresponding reduction in the Bank of England base rate."
He said that other banks are likely to follow this trend, as "once one bank cuts its rate this tends to lead to a rapid spiral downwards from other institutions".
The Bank of England base rate was 5.75% - with the average 'no notice' account paying 4.08% - just five years ago. Today, however, the base rate is 0.5% and the average no notice account is paying 0.9%. That means that, to earn £100 in interest per year, savers would now need to deposit a sum of £11,111 - compared to just £2,451 five years ago.
Savers have therefore been urged to act quickly if they want to get the best rates. You should try to snap up the accounts paying over 3% while they're still available.
Current accounts and other types of bank account could also see interest rates fall - bad news for anyone who prioritises interest when looking for an account.
A spokesperson for thinkbanking commented: "Bank account holders could see their returns falling in the future. This could be all the more reason to look at the other benefits a bank account can provide, such as complementary insurance or a personalised budgeting service."