Six big banking changes coming in WEEKS including fee hike and interest rates being axed
SIX major banks are making some big changes in the coming weeks including fee hikes.
Another instance includes an online banking platform axing a key money making feature.
Elsewhere, several banks also reducing their interest rates on savings accounts.
The changes affect a mixture of savings, investment and current accounts and thousands of customers – so it’s good to be aware of what’s coming up.
Vanguard – January 31
Launching monthly account fee
Investment platform Vanguard has introduced a minimum monthly fee of £4.
Not every Vanguard investor will see their fees go up, but customers with less than £32,000 in investments will.
The changes will come into effect on January 31, 2025 and apply to all accounts, except the junior Isa and managed Isa.
How much you’ll pay will depend on how much you have in your account, and the increase will be biggest for those with the least money invested.
If you have more than £32,000, you’ll already meet the £4 monthly minimum anyway, so you won’t need to pay any more.
But, an customer with £1,000 in their account, for example, will see a huge hike in what they need to pay in fees each year, up from £1.50 to £48.
Nationwide – February 1
Interest rates reduced on 90 saving accounts
The nation’s biggest building society is slashing the interest rates on almost 90 savings accounts from February 1.
Whether you’re affected or not will depend on the type of savings account you have.
For instance, with fixed term accounts, the interest rate you get on your savings is locked in for a set period of time so they’re not affected.
With others – often easy access accounts – the rate can change anytime.
As such, Nationwide will lower rates by between 0.10% and 0.26% on 89 variable rate easy and instant access savings and cash ISA products from February 1.
For more information on exactly which rates are being reduced and why see our full story.
Starling – February 10
Axing interest rates
Digital bank Starling is ending interest payments on current accounts for all customers in February.
At the moment, the bank pays 3.25% interest on balances up to £5,000.
This means that a customer with the maximum amount in their account could earn an extra £162.50 a year in interest.
However, this feature will be removed entirely on Monday, February 10.
Customers who currently have a sole or joint current account with Starling will continue to benefit from the perk, as well new customers, until this date.
For customers still wanting to save with Starling, the bank has introduced an easy access savings account paying 4% interest.
Saving £5,000 into this account would yield £200 in interest over 12 months.
Barclays – February 13
Cutting interest on two savings accounts
The bank which caters to over 20million UK customers is slashing interest rates on several popular saving accounts.
Barclays is set to cut interest rates on two of its easy-access savings accounts – the Everyday Saver and the Rainy Day Saver.
The account changes will kick in from February 13.
The interest rate for the Everyday Saver is dropping from 1.51% to 1.26% on balances up to £10,000.
So, if you’ve got £5,000 in there, you’ll earn about £12.50 less in interest per year, making it around £63 instead of £75.50.
But, if you’ve got more than £10,000, the rate is actually going up 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 cut.
For balances up to £5,000, the rate is going down from 5.12% to 4.87%.
If you’ve got £5,000 saved, you’ll get about £12.50 less in interest each year, earning roughly £243.50 instead of £256.
For balances over £5,000, the rate stays the same at 1.16%.
Chase – February 19
Savings account rates reduced
Chase is dropping the interest rate on its easy-access Chase Saver account from February 19.
The savings account’s interest rate tracks the Bank of England’s (BoE) base rate – the rate charged to the major banks.
The Chase Saver interest rate sits 1.25% below the base rate, which is currently at 4.75%.
However, from February 19, the interest rate will track 1.5% below the base rate instead – a 0.25 percentage point change.
It means savers will see their interest rate go down from 3.5% to 3.25%, as it stands.
Someone with £1,000 in the account would get £2.71 in interest each month, rather than £2.92, if the Annual Equivalent Rate (AER) were to stay at 3.25%.
First Direct – April 9
Axing access to self-service machines
First Direct contacted customers yesterday to let them know they will no longer be able to use HSBC UK self-service machines to pay in cash.
First Direct operates as a telephone and internet-based bank so it does not have any branches.
Instead, customers can visit an HSBC branch to access in-person banking services.
Previously they could pay in cash at the counter or by using a self-service machine.
But the bank has confirmed that this service will no longer be available from April 9.
The change could mean First Direct customers are forced to wait in lengthy queues to speak to someone at the counter.
They will still be able to withdraw cash at an ATM or over the counter at an HSBC branch for free.
But they will need to arrange to withdraw money via a counter ahead of time by calling 03 456 100 100.
Where to find the best savings rates
Many savings accounts offer miserly rates meaning that money is generating little or no return.
However, there are ways to get your cash working hard. Sun Savers Editor Lana Clements explains how to make sure you money is getting the best interest rate.
Easy access savings accounts offer flexibility for customers, meaning they can dip in and out of cash when needed. However, the caveat is that rates can change at any time.
If you’re keeping your money in an easy access account, you’ll need to keep checking whether it’s the best paying account for your circumstances and move if not.
Check in at least once a month to see what is happening in the market.
Check what is offered by your bank – sometimes the best rates are for customers only.
But do search the wider market as often top savings accounts are offered by lesser known providers.
Comparison sites are a good place to check for the top rates. Try Moneyfactscompare.co.uk or Moneysupermarket.
You can search by different account type. You’ll usually get a better interest rate if you can lock your money away for a fixed amount of time, but it’s always a good idea to keep some money in an easy access account in case of emergencies.
Don’t overlook regular savings accounts often pay some of the best rates, but you’ll need to commit to monthly payments. This can be a great way to get into a savings habit while earning top rates at the same time.
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