Interest rates are dwindling fast

Banks and building societies are continuing to slash the interest rates on their current and savings accounts.

Santander is to cut the interest rate on its popular 123 current account from 1% to 0.6% from 3 August. The rate had been 1.5% until last week. In three months customers holding the full balance (£20,000) “will have gone from earning up to £302 a year in interest to £120, but the bank will continue to charge... £5 a month”, says George Nixon for ThisisMoney.

What’s more, this month Nationwide cut the rate on its FlexDirect account from 5% to 2% on balances up to £1,500. The 2% rate is still the highest on a current account. But you only get it if you pay in £1,000 a month and it drops to 0.25% after a year. 

The upshot? Stop trying to save and spend from the same account, says Adam Williams in The Daily Telegraph. “The top easy-access savings accounts from Investec, Marcus and RCI Bank pay 1.2%... with no monthly fee.”

If you want cashback on your bills, Santander’s 123 Lite account offers the same cashback rates as its standard one but with a lower £1 fee and no interest. You can earn up to 3% cashback, capped at £15 a month. “Taking that fee into account the most an account holder can earn is £168 a year,” says Katherine Denham in The Times.

Recommended

Inheritance tax planning: using Aim shares to cut your inheritance tax bill
Inheritance tax

Inheritance tax planning: using Aim shares to cut your inheritance tax bill

If you have invested in companies listed on London’s Aim market, you can use them to reduce your inheritance tax bill, says David Prosser. Here’s how.
2 Aug 2021
Improve your odds of investment success with these three stocks
Share tips

Improve your odds of investment success with these three stocks

Professional investor Tom Wildgoose of the Nomura Global High Conviction Fund highlights three of his favourite stocks.
2 Aug 2021
Premium Bonds: a better bet for savers when interest rates are low
Savings

Premium Bonds: a better bet for savers when interest rates are low

Cash is a dull investment with interest rates near zero – but there is one way to make it more exciting without risk
2 Aug 2021
George Iacobescu: the man who transformed London
People

George Iacobescu: the man who transformed London

George Iacobescu, the man who – quite literally – put Canary Wharf on the map, is stepping back from his executive role. He will be a tough act to fol…
1 Aug 2021

Most Popular

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021