A MAJOR online bank has said it will make a big change to one of its popular accounts starting tomorrow.
Chase customers are facing a double whammy as it’s set to drop rates on one of its savings accounts tomorrow – before reducing them again next week.
Customers are currently getting 3.5% interest on the standard Saver account from accounts but this will drop to 3.25% from February 13.
From next Wednesday, they will drop again to 3%.
This is because the savings account’s interest rate tracks the Bank of England‘s base rate – the rate charged to major banks.
The base rate dropped to 4.5% earlier this month, in a move that would have relieved homeowners but comes as a blow to savers.
Markets are expecting the base rate to drop as low as 4% by the end of the year, which would see the interest rate on the Saver account reduce even further.
Of course, if the base rate increases again then the account will mirror this.
It’s not all doom and gloom though because the account is still a pretty good option for savers.
At 3% the Chase Saver standard rate is above market average for easy access accounts and it also doesn’t have restrictions, fees, charges, or penalties.
Plus it’s good news for new customers.
Anyone who signs up as a new customer can get an extra 1.5% AER (annual equivalent rate) fixed interest for the first six months (which won’t change with the base rate) on top of the basic underlying rate.
This is if they open a Chase Saver account within the first 31 days of joining the bank.
From tomorrow the 1.5% boost means the account will gain a total of 4.75% over six months for new customers.
You can sign up for one of the accounts via the Chase app which is downloadable in the Apple App Store or via Google Play.
What do the experts say?
Rachel Springall, finance expert at Moneyfactscompare.co.uk, told The Sun that the Chase account “offers a highly competitive rate” for an easy access account.
She said you should compare with other banks following the interest rate drop but Chase is “still a worthwhile choice for savers”.
“Chase offers a guaranteed bonus for six months of 1.50% AER for new customers, so those savers who are enchanted by a bonus must be sure to make a note to review the account around its expiry date,” she said.
“Savers looking to supplement their income with their pots will find this deal pays interest monthly, but they will need to open a current account to access the savings account. Any existing customers about to see their bonus expire must make efforts to shop around for a new deal if they want to maximise the interest on their savings.
“Despite the upcoming changes, Chase still be a worthwhile choice for savers who are fed up with the rates and service of a more familiar high street bank. The current account also has its own perks of merit, such as 1% cashback and is free to use abroad.”
Newer online banks often offer higher savings rates compared with high street banks as they have lower operating costs.
Numerous banks have been cutting their savings rates following the Bank of England’s decision last week.
Barclays is tomorrow slashing the rates on its Everyday Saver and Rainy Day saver accounts.
For the Everyday Saver, the interest rate is being lowered from 1.51% to 1.26% on balances up to £10,000.
The Rainy Day Saver, which is for Barclays Blue Rewards members and Premier Banking customers, is reducing its rate from 5.12% to 4.87%.
What other accounts should you consider?
It’s worth considering an easy-access savings account if you want to have no withdrawal limitations.
You’ll usually be able to make unlimited cash withdrawals with these accounts, although you will likely get slightly lower savings rates than an account with limitations.
The best easy-access account available currently is from Coventry Building Society.
This pays 4.85% and you’ll only need to pay in a minimum of £1 to set it up.
If you were to save £1,000 in this account, you would earn £48.50 a year in interest.
Meanwhile, Cahoot’s Sunny Day easy-access saver gives you an interest rate of 4.75%.
If you don’t need regular access to your savings, you might want to consider a fixed-term account instead.
These offer a fixed interest rate for a set period, meaning you have predictable returns and won’t see your interest drop with the base rate.
Alternatively, you could try a regular savings account – which often offers higher interest rates in return for customers having consistent saving habits.
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.
What’s next for savings rates?
Economists are predicting three further base rate cuts by the end of 2025, reaching a 4% base rate.
However, the Bank of England now expects inflation to peak at 3.7% later this summer, higher than earlier estimates.
This upward revision is partly attributed to the impact of policies introduced in the October 2024 Budget.
Specifically, measures within the budget have contributed to a rise in cost inflation, pushing the overall inflation figure higher.
This presents a complex situation for the Bank of England, as rising inflation typically warrants higher interest rates to curb spending and stabilise prices.
The next interest rate announcement is on March 20.
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