Savers, don't be caught out by the cutters
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Your support makes all the difference.With the base rate unchanged at 4.5 per cent since last August, you may think your savings won't be in for any shocks.
However, the Bank of England's decision to keep the cost of borrowing the same hasn't stopped a slew of providers from cutting their rates.
If you haven't reviewed your account lately, check to see what your provider has been up to.
Two of Britain's most popular savings institutions have trimmed their rates in the past few days. The Halifax has lopped 0.15 percentage points off its Web Saver account to 4.5 per cent, while Nationwide has been snipping across a range of accounts, including its eSavings and Bonus Saver, by up to 0.2 percentage points.
Plenty of others have been busy too. Last week, First Direct cut rates on some accounts, including its Everyday Savings, by up to 0.24 per cent. And that in turn followed reductions in the previous two weeks by Abbey, Alliance & Leicester and Lloyds TSB.
"Cutting interest without a preceding base rate reduction has suddenly become acceptable," warns Sue Hannums of independent financial adviser Chase de Vere.
In this way, financial firms can considerably boost their bottom line at the expense of consumers.
A spokesman for Nationwide says its cuts are about managing the margins - the difference between rates given to savers and those offered to borrowers - that generate income for the lender. The building society blames the heavy demand for its savings products, which threatens to drain its resources: "If we're going to manage [the margin], we have to [act]."
However, it was criticised for its decision to cut savings rates barely hours after unveiling a table-topping 4.25 per cent on its FlexAccount current account from 1 April.
Rachel Thrussell from financial analyst Moneyfacts points out that although rates are being cut, institutions are doing so only on selected products - not across the board. "Many are still offering headline rates to attract new customers."
She predicts that these reductions won't be the last, and urges savers to stay alert: "Keep a close eye on your money and be willing to move it when interest rates drop."
Even though it has cut its rate to 4.41 per cent gross, Ms Hannums still recommends ING Direct. She also picks out Anglo-Irish's Easy Access deposit account, paying 4.8 per cent, although savers here will need to invest a minimum of £500.
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