Metro Bank has been a competitive contender in the savings market for the past six months as it topped our tables for the best savings accounts.
But as we entered the new year, the challenger bank pulled its 5.66% one-year fixed bond from the market, and on 16 January it slashed the rate on its Instant Access Saver from 5.22% to 4.51% AER (now offering a measly 1.65% return).
Whilst the market-leading rate was off the shelves for new customers, Metro Bank still kept the 5.22% return available for its existing customers, as a ‘limited edition’ rate.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, existing customers have been notified this week that the limited edition rate will drop to 4.97% AER from 22 April.
It comes as the savings market has been fluctuating up and down the past week, particularly easy-access savings and fixed bonds. Rachel Springall, finance expert at Moneyfacts says lenders are looking at their competitors and “adjusting their market positions”.
We have the full details on the Metro Bank savings account and if now is a good time to switch to a better deal.
Metro Bank to cut Instant Access Savings rate
Metro Bank will slash the rate on its Instant Access savings account for existing customers on 22 April. The rate will drop from 5.22% to 4.97% AER.
Metro Bank customers who hold the saver should be notified via email this week. The challenger explains the rate cut will happen as a result of reviewing recent changes in the savings market.
The bank provider has reassured its customers that the rate will not fall below its standard variable rate of 1.65%.
With two months advance notice on the rate drop, you have time to decide if now is a good time to bag a better deal and shop around.
Should you switch to a better savings account now?
Metro Bank’s 5.22% loyalty rate stands as the best easy-access savings deal on the market right now.
With the bank setting its rate cut to take place in two months time, it sounds like the better option is to wait it out, earn the top rate until April and then switch- especially because the rates on the rest of the easy-access market could fluctuate between now and April.
Currently, Cahoot’s Sunny Day Saver is the best easy-access saver on the market- offering 5.2% AER on balances up to £3,000 and available to new customers.
Ulster Bank is also returning 5.2% AER on its loyalty easy-access account and despite the name, it is available to new customers.
However, if you do wait a month or two to switch to a better deal, the top paying 5.2% savers could plummet by then depending on what happens with the Bank of England’s base rate.
Experts predict that we could see interest rates fall by early May, which could have a knock-on effect on savings.
Springall warns savers: “As we have seen in the past, any cuts to base rate, or indeed expectations for interest rates to drop, can have a notable impact on variable savings rates.”
If you’re in a position to lock in your savings for a year, it’s a good time to fix as the market has seen some lenders increase their rates in the past week and you can earn up to 5.21% AER.
Plus, you’re guaranteed that return for a year regardless of the base rate falling.
-
Pension warning: one in five don’t know how much is going into their pensionHow to check your pension contributions and why it matters
-
50,000 power of attorney applications rejected – how to avoid common mistakesA freedom of information request shows that thousands of lasting power of attorney (LPA) applications are rejected due to errors. We explain how to avoid mistakes and reveal tips to make the process as straightforward as possible
