Marcus’s announcement last week that it was to cut the rate on its best buy Online Savings Account was a fresh blow to savers and was swiftly followed by a matched rate cut to the RCI Freedom Savings account.
Both accounts now sit at the bottom of our easy access Best Buy table, paying competitive but no longer market leading rates.
The rate for new customers on both accounts has dropped from 1.20% to 1.05% AER with immediate effect.
For existing Marcus customers, the rate they are earning will drop by 0.15% from 30th May, having previously cut by 0.10% at the end of April. The new rate of 1.05% is the underlying rate – anyone who still has a bonus, will continue to earn this in addition to the underlying rate for the 12 months since they renewed their bonus.
Existing RCI Freedom Savings Account customers will see their rate drop from 1st June 2020.
Although disappointing, it’s not really unexpected as best buy easy access rates have held up pretty well so far following the double base rate cut in March, which saw the base rate slashed by 0.65% in total.
With that in mind, it should be noted that Marcus customers have only seen a total cut of 0.25% and RCI just 0.15% - so far.
And when you consider that the high street banks are paying just 0.01% on their easy access accounts, these new rates are still competitive – although there are currently better to be found.
After NS&I did a U-turn and cancelled planned cuts to its easy access accounts, the Income Bonds account is now sitting in the top spot paying 1.15% monthly gross – however time will tell how long that lasts for. It’s very unusual to see NS&I at the top of the best buy tables so, due to the rate cuts that are continuing to blight savers across the board, I think we could still see a rate cut on some or all of the NS&I easy access accounts even though NS&I pledged “to support savers at this difficult time” .
The Income Bonds account, isn’t for everyone as it pays the interest out monthly, so you don’t benefit from compounding interest although of course you can add the money back into the account. But the Direct Saver account, which does allow you to roll up the interest, is also looking very competitive (although just missing a spot on the best buy table) at 1% AER and savers can deposit up to £2m into that account, with all funds protected by HM Treasury. It's £1m maximum into the Income Bonds.
Family Building Society currently offers the next best two accounts paying 1.13% AER and 1.06% AER, followed by Marcus and RCI with their new lower rate of 1.05% AER.
Unfortunately Marcus has been a bellwether for other best buys since its launch in September 2018, so we can expect further cuts in the easy access market. After the base rate dropped to 0.25% in August 2016, even the best buy easy access rates fell to 1% - so I’m afraid we wouldn’t be surprised to see something similar if not worse.
Keep an eye on our Best Buy tables to stay up to date with how interest rates are faring.