More misery for savers: Marcus Bank slashes its easy-access account rate to 0.7% – blaming ‘market conditions’
- Marcus has continually cut its rate for its easy-access customers
- The new rate of 0.7% – down from 1.05% – will come into effect on 12 October
- NS&I also slashed its rates earlier this week
There is more misery for savers on the horizon as Marcus, Goldman Sachs’ easy-access account, has slashed rates to 0.7 per cent from 1.05 per cent.
Marcus, which launched to much fanfare in summer 2018, has cut the rate from 1.5 per cent and the beginning to 1.3, 1.2 and then 1.05 per cent, and this marks its deepest change yet.
It said it will be writing to its existing customers to give them at least 14 days’ notice of the change, which will take effect on 12 October 2020.
It blamed the changes on current market conditions, saying savings rates across the market have fallen faster and further than expected over recent months due to the pandemic.
Cuts: Marcus, Goldman Sachs’ easy-access account, has slashed its rates to 0.7 per cent
It added there are ‘many factors’ it has to consider when setting its pricing structure with the Bank of England’s base rate remaining at 0.10 per cent, the lowest on record, causing problems.
Marcus said in order to build a sustainable savings business in the long term, it needs to adjust its pricing to current market conditions.
A spokesperson said: ‘It’s with this context that we’ve taken the difficult decision to adjust our interest rate.’
One customer, who has received the notification this morning which This is Money has seen, says she couldn’t believe that there was no explanation in the email to justify the rate change.
Marcus has attracted around £21billion from more than half a million UK savers, mainly to its easy-access account, meaning it has racked up around £1billion from savers a month since it launched the account in September 2018.
However, Goldman Sachs closed the easy-access account to new customers in June, after a flood of deposits during the coronavirus pandemic left it close to breaking regulatory limits, as it continued to linger at the top of the independent This is Money best buy tables.
These changes hit all existing customers with money in its easy-access account.
Savings rates have fallen dramatically since the Bank of England’s emergency rate cuts in March, and after Marcus’ announcement there are now just two accounts paying 1 per cent on savings.
Marcus’ account, which used to be market leading, now falls far behind the leader, Coventry Building Society, which offers a rate of 1.1 per cent for its customers.
Principality Building Society offers 1.05 per cent and is in second place in our tables.
To find out who else is offering the best savings deals, click here.
NS&I Income Bonds will go from paying 1.15 per cent monthly interest to just 0.01 per cent
NS&I and TSB cuts
The fresh blow comes on the back of National Savings & Investments making ‘savage’ cuts earlier this week, to come into force in November.
NS&I said that from 24 November its Income Bonds will go from paying 1.15 per cent monthly interest to just 0.01 per cent, the same rate paid by Britain’s biggest banks.
It added that from December the odds of winning anything in the Premium Bonds draw will go from 24,500 to one to 34,500 to one, and the estimated number of total prizes won reduced by 1million.
Again, NS&I had seen billions poured into its accounts over the past few months as savers moved to protect their money during the coronavirus pandemic.
Ian Ackerley, NS&I’s chief executive, said: ‘In April we cancelled interest rate reductions announced in February and scheduled for 1 May.
‘Given successive reductions in the Bank of England base rate in March, and subsequent reductions in interest rates by other providers, several of our products have become “best buy” and we have experienced extremely high demand as a consequence.
‘It is important that we strike a balance between the interests of savers, taxpayers and the broader financial services sector; and it is time for NS&I to return to a more normal competitive position for our products.’
Meanwhile, TSB has axed interest on its current account altogether. It paid 5 per cent on balances up to £1,500 as recently as summer 2019, but this will fall to nothing in December.
THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS