NATIONWIDE is making a big change to millions of accounts in weeks leaving savers worse off.
The major building society is cutting interest rates on over 60 savings accounts from June 1.
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The move comes after the Bank of England slashed the base rate from 4.75% to 4.5% in February.
The base rate affects the interest rates banks offer to customers on a range of products including savings accounts and mortgages.
A lower base rate signals good news for mortgage holders but has a negative knock-on effect on savers who usually see their rates drop.
Nationwide is cutting rates on 63 of its savings accounts on June 1, from ISAs to easy access savings accounts.
Whether you are impacted and how much by depends on the type of account you have, plus how many withdrawals you can make from the account per year.
For example, the interest rate on Nationwide’s Triple Access ISA is currently 2.15% if you can make three or fewer withdrawals a year but from June 1 this will fall to 1.95%.
If you’ve got the same savings account and can make four or more withdrawals each year the rate is currently 1.75% but will fall to 1.50% from June 1.
Meanwhile, if you have a Single Access ISA and can make one or fewer withdrawals each year, the rate is dropping from 3.55% to 3.35%.
However, if you can make two or fewer withdrawals each year, your rate will fall from 1.75% to 1.50%.
Tom Riley, Nationwide’s director of retail products, said the building society had “worked hard” to limit any reductions in savings rates.
He added: “We have not made any changes to our Children’s FlexOne Saver and those savings which encourage a savings habit.
“Following these changes, our savings range will remain competitive and continue to pay more than the market average, giving savers every reason to put their money with Nationwide.”
Not all savers will see their interest rates fall from June 1, including those with child savings accounts.
For example, if you’ve got a Branch Smart Limited Child account and are allowed to make two or more withdrawals from it each year, the interest rate will stay at 1.80%.
If the interest rate on one of your Nationwide savings accounts is being cut, you should receive notification from the building society telling you. This communication may come via email.
For more information on what specific accounts will see their interest rates drop, go to www.nationwide.co.uk/savings.
What you can do if you’re affected
Nationwide customers set to see their savings account interest rates drop from June 1 could shop around for a different deal and switch.
According to Moneyfactscompare.co.uk, Chip and Sidekick are offering the best easy access account rates of 4.76%.
Meanwhile, the best rate on an easy access Cash ISA is with Trading 212 which is offering a 5.07% rate.
Of course, whenever you’re looking to switch to a different savings rate, make sure you factor in everything before deciding to change.
It’s not just the headline savings rate you should keep an eye out for, but any withdrawal penalties, when interest is paid and if the account comes with a temporary bonus rate.
A lot of banks and building societies offering bonus interest rates which last for a set period but then drop to a lower rate.
Think about the type of savings account you want to switch to as well.
If you’ve currently got an easy access savings account with Nationwide it could be worth switching to an ISA.
The main advantage to ISAs is that you aren’t taxed on any earnings whereas with a standard savings account you are taxed on interest earned above your Personal Savings Allowance (PSA).
This is either £0, £500 or £1,000 depending on your income tax band.
SAVING ACCOUNT TYPES
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.
In other news, economists are predicting interest rates to fall at their fastest pace since the 2008 financial crash this year.
The dropping rates spell bad news for savers who will likely see interest rates on their savings account fall further.
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