Nationwide Building Society has announced that pre-tax profits in the year to 4 April 2020 have plunged by 44%, from £833m to £466m. Chief Financial Officer, Chris Rhodes announced that credit losses resulting from customers taking loan payment holidays have cost the business £101m. As a result, Nationwide’s savers, who have already experienced swingeing cuts to their accounts, could see even more reductions.
Chief Executive Officer, Joe Garner said that “exceptionally low interest rates mean it is unlikely we will meet our member financial benefit target next year. With the bank base rate at 0.10%, paying savings rates significantly higher than this would not be financially sustainable, nor in the long term interests of our members or the society”
While this is bad news, sadly it’s not too surprising and it means that Nationwide is fast becoming another high street provider paying virtually no interest to its customers.
Lloyds, Barclays, HSBC, NatWest, Halifax and Santander are all paying or are about to cut the rates on their on-sale easy access accounts to 0.01% - so on a balance of £10,000, you will earn just £1 a year.
But they are not alone. Since the double base rate cut in March this year, 285 accounts have seen a rate cut down to just 0.01% - with a few even paying nothing at all.
And over 500 accounts are paying less than 0.10% - 14% of the savings market.
If you’ve got one of these appalling accounts, you need to move it as even in this incredibly low interest rate environment, there are far better rates to be found.
NS&I continues to top the easy access table, paying a monthly interest rate of 1.15% gross. If you put your £10,000 into this account, you would earn £115 a year – far better and certainly worth switching for. But, NS&I appears to be struggling with the demand. You may even need to queue to get onto the website – so you’ll need to be patient.
Marcus and RCI come next, each paying 1.05% AER.
Those who don’t need access to all of their savings might want to consider locking some of their cash away in a fixed rate bond, to protect at least something from the continuing rate cuts. Unfortunately, best buy fixed rates have also continued to fall in this market, but you can still earn 1.21% AER fixed for 12 months with Ikano Bank (protected under the Swedish Deposit Protection Scheme). The next best is with Metro Bank, paying 1.20% gross/AER.
The longer the term, the better the rates. Ikano Bank is paying 1.56% AER fixed for 5 years. And in between, the best three year is paying 1.41% gross/AER – again from Ikano Bank.
Sitting between easy access and fixed rate bonds are notice accounts. These accounts allow you access to your money after you give a certain amount of notice, so they tend to pay a little more than easy access, but a little less than fixed rates.
At the moment, the best notice account is with Shawbrook Bank, paying 1.20% on its 120 Day Notice Personal Account Issue 44.
What all of this illustrates is that although the situation for savers is pretty dire, by shopping around it is still possible to earn a little more – especially if you’ve allowed your cash to languish with one of the high street banks. Now, more than ever, is the time to move on.