Savers who opened an Isa paying a top rate are being warned to check if it has slumped in the aftermath of the Bank of England rate cut yesterday.
Savings rates on easy-access accounts and Isas have already begun to fall following base rate dropping from 4.25 per cent to 4 per cent.
Experts warned this would be bad news for savers as the rate on their easy-access accounts – both Isas and ordinary – will fall.
The day before the base rate was cut, CMC Invest* – offering a 5.44 per cent interest rate – moved to scrap its three month bonus of 0.85 per cent, bringing the underlying rate to 4.59 per cent.
Savers who open the account today will get this rate and it it still one of the most competitive cash Isa rates while also being a flexible Isa.
But it is existing savers who will likely be hit hardest by easy-access rates plummeting, as savings providers tend to offer higher rates to new savers to reel them in.
New issues of an Isa often come with similar names to a previous account, or the same name and a different issue number.
Storm ahead: Savings rates on easy-access accounts and Isas have started to plummet following the Bank of England cutting the base rate
There are 2,177 closed easy-access ordinary and cash Isa accounts, according to rates scrutineer Moneyfacts, up from 2,089 a year ago.
For example, savers who opened Trading 212’s top easy-access Isa* when it was offering 5.1 per cent to new savers will find that their rate today is just 3.85 per cent, having been cut several times due to the base rate falling.
The savings and investment provider emailed savers to warn them that, as of today, their rate would fall from 4.1 per cent to 3.85 per cent, due to the Bank of England cutting the base rate.
New customers who open the Trading 212 cash Isa will get a far more competitive rate of 4.67 per cent.
Meanwhile, Coventry Building Society, the second largest building society in the UK, closed its Four Access Saver offering 4.5 per cent to new savers and Secure Trust shut its easy-access account at 4.4 per cent replacing it with a new version at 4.2 per cent.
Cynergy Bank has also cut its Isa rate from 4.2 per cent to 3.9 per cent.
Though these rates still outpace CPI inflation of 3.6 per cent by a wide margin and are higher than the average easy-access Isa rate paying 2.89 per cent, savers – especially those who have been with their Isa provider for some time – can get yet better returns.
Rachel Springall of rates scrutineer Moneyfacts Compare says: ‘Some of the top cash Isa rates apply a heavy bonus, so it’s essential savers switch before the rate plummets.
Savers who have been stung by their older issue rate being cut should look for an Isa that offers a competitive rate, has as few restrictions as possible and offers a rate that plays over CPI of 3.6 per cent.
Rachel Springall says: ‘Savers could find their variable rate account no longer outpaces inflation, especially if CPI rises in the coming months.
‘Signing up to rate alerts and newsletters to get the latest rate moves is wise, as is checking pots not just now but at the start of September, in case other brands hold off cutting rates until then.’
Moneyfacts recommends Tembo’s easy-access cash Isa which pays 4.65 per cent, as well as Charter Savings Bank which pays 4.4 per cent.
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