Santander is making a huge change to bank accounts used by thousands from TODAY
DON'T BANK ON IT
If you're not happy with the change, scroll to find out how you can switch banks
- Lucy Alderson, Senior consumer reporter
SANTANDER is slashing interest rates for two of its savings accounts from today - and customers should check if they’re affected.
The major bank is cutting savings rates from June 3 (today) on its Good for Life ISA and Rate for Life accounts.
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The interest rate on the Good for Life ISA account will drop from 4.5% to 4.25%, while the rate for the Rate for Life account will drop from 4.75% to 4.5%.
Those who have saved less than £1,000 in the Rate for Life account will still continue to earn the same rate (1%) on these balances.
It comes after the Bank of England (BoE) cut the base rate from 4.5% to 4.25% last month - the fourth cut since 2020.
The base rate is used by banks to determine the interest rates offered to customers on savings and borrowing costs.
While a rate cut is good news for borrowers, it’s usually bad news for savers, who will usually see savings rates fall when the base rate is cut.
This means they will earn less on their cash.
For example, the average easy access savings rate was 2.78% on May 8, when the base rate was cut.
Now it has dropped to 2.72%, according to comparison site Moneyfacts.
Santander is not the only bank cutting rates on savings accounts. HSBC has also cut rates on eight of its savings accounts today.
Nationwide Building Society cut savings rates on 63 of its accounts on Sunday, from easy-access ISAs to children’s accounts.
NatWest cut savings rates on four of its accounts last Friday.
Meanwhile, rates on three of its savings accounts and a kids' current account will be slashed from July 15.
As savings rates tumble, now is a good time to check what the interest rate is on your existing account.
Around £280billion is sitting in accounts paying zero interest, according to latest data from the BoE.
If you have an interest rate below the rate of inflation - which is currently 3.5% - then consider moving your money elsewhere, otherwise the spending power of your savings is eaten away.
Use price comparison sites such as moneysavingexpert.com or moneyfactscompare.co.uk to browse the best savings accounts on the market.
The best easy access savings rate (based on a balance of £1,000) is offered by Atom Bank at 4.5 per cent.
Experts are predicting that more cuts to the base rate this year are likely, so it may be worth considering locking up your money in a fixed rate savings account if you can afford to do so.
The best one year fixed rate savings account is offered by Hampshire Trust Bank at 4.45%.
However, be aware that you usually can’t make withdrawals out of fixed term savings accounts, even in an emergency.
Anne Bowes from The Private Office said: “Review your savings accounts and switch if you are being paid an uncompetitive rate.
“Double check the terms and conditions of any account you are looking to open – or indeed close - as some accounts may have very short-term bonuses or restricted access.
“That means you might not earn as much interest as you hoped, or get hold of the money in as timely a manner as you were expecting.”
For customers not happy with the latest shake-up, you may want to consider switching banks.
Switching bank accounts is a simple process and can usually be done through the Current Account Switch Service (CASS).
Dozens of high street banks and building societies are signed up - there's a full list on CASS' website.
Under the switching service, swapping banks should take seven working days.
You don't have to remember to move direct debits across when moving, as this is done for you.
All you have to do is apply for the new account you want, and the new bank will tell your existing one you're moving.
There are a few things you can do before switching though, including choosing your switch date and transferring any old bank statements to your new account.
You should get in touch with your existing bank for any old statements.
When switching current accounts, consider what other perks might come with joining a specific bank or building society.
Some banks offer 0% overdrafts up to a certain limit, and others might offer better rates on savings accounts.
And some banks offer free travel or mobile phone insurance with their current accounts - but these accounts might come with a monthly fee.
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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