Metro Bank to slash savings rates below 4% – is now a good time to move your cash?
Metro Bank savings rates are set to plummet below 4%. But, there’s still time for savers to move their money – should you shop around now and which accounts are affected?
Metro Bank has notified its customers that all of its Current Limited Edition savings rates will plummet below 4% in a couple of months’ time.
The challenger bank has been a top player when it comes to the best savings accounts as it’s offered market-leading returns over the past year. But it seems the provider is now changing strategy. The announcement from Metro Bank came a day before the Bank of England held the base rate for the sixth time.
It’s not the first time Metro Bank has cut its savings rates. In January, the provider pulled its top 5.66% one-year fixed saver from the market and cut its Instant Access Saver rate from a market-leading 5.22% to 4.51%. That account now pays just 1.65% AER.
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And it’s not the only bank to be trimming rates. Santander is cutting its top 5.2% easy-access saver rate later this month.
While Metro Bank customers have a few months before the rate cut kicks in, is it a good time to move savings accounts now, and which Metro Bank savings accounts are affected by the cuts?
Metro Bank savings cuts
Metro Bank will cut the rate on its variable Current Limited Edition savings accounts to 3.95% AER on 8 July.
The Current Limited Edition rates refer to Metro Bank savings accounts that are closed to new customers, but the rate is still live for those who took advantage of the account before it came off the market and met the eligibility criteria at the time.
Customers affected include those who opened a Current Limited Edition Instant Access Account or Instant Cash ISA between 10 November 2023 and 12 February 2024, and are currently earning one of the following rates: 5.22% AER, 4.97% AER, 4.51% AER or 4.01% AER.
Customers affected would have been notified this week regarding the change, two months in advance.
The bank has also notified customers that it is removing the “end date” on all Current Limited Accounts at which point the rate you earn changes. Metro Bank typically ends limited edition rates after 12 months. Instead, the provider will notify savers via email if it decides to change or end the limited rate they earn.
The good news is, there are still around two months until the rate cuts. So, should you move savings accounts now or stick with Metro Bank?
Is now a good time to move savings accounts?
If you’re looking to move savings accounts now, there are deals on the market that beat Metro Bank’s new 3.95% rate.
Those looking for flexibility can earn up to 5.2% AER on the top easy-access savings account. Natwest-owned Ulster Bank is one provider returning 5.2% - but it does require savers to deposit at least £5,000.
Cahoot (a division of Santander) is also offering 5.2% and you can start saving with just £1. But the catch is, you can only earn the rate on up to £3,000.
Still, if you want a savings pot where you can start with a little but put a lot more in, Kent Reliance is offering 4.96% AER on its easy-access account. You can start saving with £1,000 and save up to £1 million.
But remember, rates on easy-access accounts are variable, which means they can change depending on market conditions.
The Bank of England held interest rates for the sixth time yesterday (9 May), and experts believe a base rate cut is on the horizon in the next few months – which could have a downward effect on savings.
So, if you’re looking to move accounts, it might be better to do it now rather than later.
Mark Hicks, head of Active Savings at Hargreaves Lansdown, said: “Banks have been slowly reducing the rates on offer in the easy-access space, as they start to prepare for a base rate cut later this year. There are only a handful of products now above 5%.”
If you are prepared to fix your savings for a year, right now you can earn up to 5.18% AER with SmartSave’s one-year fixed account. Although this is slightly below the top easy-access rate, you will have certainty on the rate you earn for a year.
SmartSave requires a £10,000 minimum deposit. If you’re willing to knock off a few percentage points, Atom Bank’s one-year fixed saver is returning 5.15% AER and you can start saving with just £1.
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Vaishali has a background in personal finance and a passion for helping people manage their finances. As a staff writer for MoneyWeek, Vaishali covers the latest news, trends and insights on property, savings and ISAs.
She also has bylines for the U.S. personal finance site Kiplinger.com and Ideal Home, GoodTo, inews, The Week and the Leicester Mercury.
Before joining MoneyWeek, Vaishali worked in marketing and copywriting for small businesses. Away from her desk, Vaishali likes to travel, socialise and cook homely favourites
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