Bank account change for thousands of Barclays customers from today that could leave you worse off
A MAJOR account change at Barclays could leave thousands of customers worse off from today.
The bank which caters to over 20million UK customers is slashing interest rates on several popular saving accounts.
Barclays has cut interest rates on two of its easy access savings accounts, the Rewards Saver and Blue Rewards Saver.
These accounts let you deposit and withdraw money freely, but the interest rate depends on whether you make withdrawals during the month.
The Rewards Saver now offers a 2.51% interest rate if no withdrawals are made during the month, down from 2.75%.
So, if you have £5,000 saved, you would have earned about £137.50 in interest per year before the change, and now you’ll earn around £125.50, roughly £12 less.
If a withdrawal is made, the rate temporarily drops to 0.76%, a reduction from 0.85%.
On £5,000, this means you’ll earn around £38 a year in interest, about £4.50 less than before.
The Blue Rewards Saver, which offers slightly higher rates and is only available to Barclays Blue Rewards or Premier Banking customers has also had its rates cut.
If you don’t withdraw any money during the month, the rate has fallen from 3.40% to 3.17%.
For someone with £5,000 in savings, this means a drop in annual interest from roughly £170 to about £158.50 – a difference of around £11.50 a year.
If you do withdraw money during the month, the interest rate has been lowered from 1.01% to 0.76%.
On a balance of £5,000, this reduces the annual interest from about £50.50 to around £38, a difference of about £12.50 a year.
The Blue Rewards Saver rates have been reduced from 3.40% to 3.17% when no withdrawal is made in the calendar month and from 1.01% to 0.76% when a withdrawal is made in the calendar month.
MORE CUTS ON THE WAY
Starting February 13, Barclays is making changes to the interest rates on two of its other easy-access savings accounts – the Everyday Saver and the Rainy Day Saver.
For the Everyday Saver, the interest rate is being lowered from 1.51% to 1.26% on balances up to £10,000.
So, if you have £5,000 in this account, you’ll earn around £12.50 less in interest per year after the change (approximately £63 instead of £75.50).
However, for balances over £10,000, the rate is actually increasing from 1.16% to 1.26%.
The Rainy Day Saver, which is for Barclays Blue Rewards members and Premier Banking customers, is also seeing a rate reduction.
For balances up to £5,000, the rate is falling from 5.12% to 4.87%.
If you have £5,000 saved, this means you’ll earn about £12.50 less interest annually (roughly £243.50 instead of £256).
The rate for balances over £5,000 will remain at 1.16%.
If you currently have money saved in any of these accounts, you might want to consider moving your money to a different account with a better interest rate.
High street banks often offer lower interest rates compared to newer online banks.
These challenger banks often have lower operating costs, allowing them to offer more competitive interest rates to attract customers.
Several providers are currently offering interest rates of up to 4.86% on their easy-access products.
What’s on offer?
If you’re looking for a savings account without withdrawal limitations, then you’ll want to opt for an easy-access saver.
These do what they say on the tin and usually allow for unlimited cash withdrawals.
The best easy-access savings account available is from GB Bank via savings platform NuWealth, which pays 4.86% – and you only need to pay a minimum of £500 to set it up.
This means that if you were to save £1,000 in this account, you would earn £48.60 a year in interest.
Alternatively, Chip’s easy access saver offers customers 4.85% back on savings worth £1 or more.
If you’re looking to grow your savings and don’t need regular access to your funds, a fixed-term bond or a regular savings account could be a better option.
Fixed-term bonds offer a fixed interest rate for a set period, providing predictable returns, while regular savings accounts encourage consistent saving habits with potentially higher interest rates than standard easy-access accounts.
We’ve explained below how each type of savings account works.
Plus we’ve explained how to find the best savings rates.
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.
What’s next for savings rates?
Savings rates usually rise and fall with the Bank of England’s base rate.
This was cut for the second time in four years from 5% to 4.75% in November, but then rates were held at 4.75% in December.
The next interest rate announcement is on February 6.
If interest rates continue to fall, it spells bad news for savers, whose rates typically fall when the Bank’s rate is cut.
However, in the meantime, opting for a fixed bond can be a useful bet to help ride out future cuts to the base rate.
FINDING THE BEST SAVINGS RATES
WITH your current savings rates in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
Research price comparison websites such as MoneyFactsCompare.co.uk and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you’ll want to consider any account that currently pays more interest than the current level of inflation – 2%.
It’s always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you’re saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.