NATIONWIDE is making a major change to dozens of bank accounts in days affecting millions.
The major building society is slashing interest rates on more than 60 savings accounts from next Sunday (June 1).
It comes after the Bank of England (BoE) cut its base rate from 4.75% to 4.5% in February.
The base rate is the rate charged to smaller high street banks and is usually mirrored in savings rates.
Nationwide is cutting rates on 63 of its savings accounts on June 1, from easy-access ISAs to children’s accounts.
The Branch Smart Limited Child account will drop from 3.05% to 2.85%, on accounts where one or no withdrawals have been made.
Customers with the same account who have made two or more withdrawals won’t see their interest rate (1.80%) change.
Meanwhile, bankers with a Continue to Save account will see their interest rate slashed from 2.10% to 2% from next Sunday.
The Help to Buy: ISA account is dropping 0.2 percentage points from 3.10% to 2.90%.
How much the interest rate on your account is cut may depend on how much you have saved.
For example, if you’ve got a Branch Flex Saver account and a balance between £0.01 and £9,999, the interest rate will drop from 1.85% to 1.60% on June 1.
However, if you have £10,000 to £49,999 stashed away, the rate will fall from 1.90% to 1.65% instead.
You can see how much each savings account is affected by looking at the table above.
The move from Nationwide comes after a host of banks confirmed they will lower interest rates on savings accounts following two cuts to the BoE base rate.
The central bank earlier this month cut the rate further, from 4.5% to 4.25%, prompting HSBC to announce it will cut rates on eight of its savings accounts from June 3.
NatWest is also cutting rates on a number of accounts from the end of this month, while Newcastle Building Society is dropping rates on 37 of its personal savings accounts from June 5.
What you should do now
It doesn’t matter who you bank with, if you’re expecting the interest rate on a savings accounts to drop soon it’s time to take action.
It pays to shop around for the best deal so you’re not left shortchanged.
Use price comparison sites like moneysavingexpert.com or moneyfactscompare.co.uk to browse the best savings accounts on the market.
But make sure you look beyond the headline savings rate on offer.
Plenty of savings accounts come with bonus rates which are only available for a set period after you open them, after which they drop off leaving you with meagre returns.
Others will only offer you a specific interest rate if you make a limited number of withdrawals each year.
Go over this withdrawal limit and the interest rate can plummet.
Some savings accounts offer additional perks which can make them more worth your time too.
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.
For example, the Club Lloyds account comes with rewards including 12 months of Disney+ for free, six cinema tickets or discounted coffee.
There is a £3 fee to maintain the account though, which is rising to £5 from June 2.
In other news, Nationwide is set to reveal whether customers are in line for another £100 Fairer Share payment within days.
The building society said it will reveal whether a third successive payment will be issued when it reveals its full-year results on May 29.
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