Barclays Cuts Down Savings Rates

Yesterday Barclays has cut down rates on some of the savings accounts. Nationwide building society, meanwhile, has increased its overdraft rates. There have been no obvious reasons or signs of waggle in the banking sector lately. Bank rate has remained on hold for two last months and is not anticipated to change this week. According to analysts’ opinion the explanation for this kind of moves is pretty clear. Banks and building societies are making attempts to increase profit margins while interest rates are at their record lows. Barclays has cut rates on children’s savings accounts Barclay’s Children savings and Barclay plus by 0.25 percentage points. It also reduced its Cash Isa rate on £18,000 from 0.31% to 0.1%. A pretty popular Tax Haven Isa was neither left out. Not to mention the fact that the program was closed to new business this March, now the savers lost a few percentage points. Popular with retired people monthly-interest account with a traditional 2.08% has been cut to 1.83%, including a one percentage point bonus for twelve months starting from the date of opening the account. However, according to Moneyfacts’ research, a financial information company, Tax Haven has been reduced by less than Bank rate since October 2008. Tax Haven lost 4.25 points against 4.5 points for Bank rate. The Barclays contestable move followed its last week increase of the overdraft rates on eight out of twelve current accounts, by as high as 3.9% for some. Nationwide decided to follow Barclays footsteps. Yesterday the building society raised both authorized and unauthorized overdraft rate on its Flex current account to 18.9%, which is 1% higher than before. Although the rate made up just 9.9% in February last year. Kevin Mountford, one of the price comparison analysts, assumed that cut in savings rates at Barclays as well as the hike of overdraft rates at both Barclays and Nationwide, is an indicator of banks attempts to boost profit margins. He also added that other financial institutions would probably follow suit. This is a warning for savers that even despite Bank rate is expected to remain the same in the nearest future, savings rates may change. Golden Isa offered by Barclays has changed its terms as well. Starting June 1, 2009 new customers are not eligible to receive an introductory bonus of 1% and will get a rate of 2.55%. However, existing customers will keep their 3.55% rate. A spokesman for Barclays though claims they are making slight alterations to the interest rates, which will not significantly affect the majority of their savers. He stated that the alterations concerning savings accounts are made to adjust to current market conditions. And the further review of the rates will imply a competitive and fair price for their savers. Barclays also pointed out it was to raise rates on fixed-rate bonds as of June 2. They are launching a new one-year bond today, which will allow savers to earn 3% against 2.2% rate available previously. Nationwide, as a justification, refers to the fact that their rate still remains below the average rate that most major high street banks charge.

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