Barclays is set to reduce interest rates on two of its savings accounts from 13 February, impacting Everyday Saver and Rainy Day Saver customers. This decision follows a broader trend of declining savings rates across the banking sector, with Nationwide also announcing cuts on nearly 90 savings products.
Lower Rates for Everyday Saver and Rainy Day Saver
Barclays’ decision to reduce interest rates on two of its key savings accounts comes at a time when customers are already facing challenges in maximising returns on their deposits. The changes primarily affect Everyday Saver and Rainy Day Saver accounts, both of which are easy-access savings options that allow withdrawals without penalties.
While some customers with larger balances may see a minor improvement in their rates, the majority will experience a reduction in earnings on their savings. This adjustment aligns with a wider market trend, where several banks and building societies are lowering their savings rates amid shifting economic conditions.
The changes will impact two of Barclays’ popular easy-access savings options :
- Everyday Saver: The interest rate will drop from 1.51% to 1.26% for balances up to £10,000, while balances above £10,000 will increase slightly from 1.16% to 1.26%.
- Rainy Day Saver: The interest rate for balances up to £5,000 will decrease from 5.12% to 4.87%, while balances above £5,000 will remain at 1.16%.
The Rainy Day Saver is exclusively available to customers enrolled in the Barclays Blue Rewards programme or those with Premier Banking status..
A Broader Trend of Declining Savings Rates
The rate cuts at Barclays reflect a larger shift in the UK savings market. Nationwide, one of the UK’s largest building societies, has also announced rate reductions across nearly 90 savings products, effective 1 February.
Nationwide’s changes will affect variable-rate ISAs, instant-access savings, and cash ISAs, with rate cuts between 0.1% and 0.26%. The company has stated that, despite the reductions, it aims to keep its offerings competitive.
Why Are Banks Lowering Savings Rates?
Several factors contribute to the decline in savings rates across the industry :
- Market interest rates: While the Bank of England’s base rate remains at 5.25%, banks may adjust their savings products based on internal financial strategies.
- Profitability considerations: Banks balance the cost of paying interest on savings with their ability to lend money at higher rates.
- Consumer behaviour: With many depositors withdrawing funds to cover rising living costs, banks may respond by modifying their savings products.
Despite these factors, Barclays has not provided an official statement explaining the exact reasons for its rate cuts. Moreover, the bank has not disclosed how many customers will be affected, and there is no information on how Barclays’ new rates compare to those of other major banks, such as HSBC or Lloyds.
Alternatives for Savers Looking for Better Returns
For those seeking higher interest rates, several alternative savings accounts currently offer more competitive returns :
- Chip: 4.7% interest, with unlimited withdrawals and no minimum balance.
- Atom Bank: 4.85%, provided no withdrawals are made in a given month.
- Leeds Building Society: 4.4% for balances above £1,000.
- Skipton Building Society: 4.4% with a minimum deposit of £1.
Comparing different savings accounts, ISAs, and fixed-term deposits could help customers maximise their savings amid changing interest rates.
What Should Barclays Customers Do Next?
Customers impacted by the rate reductions may consider :
- Reviewing their accounts to determine how much they will be affected.
- Exploring competitor rates to see if better options are available.
- Monitoring future rate adjustments, as banks frequently update their interest rates based on market conditions.
While Barclays has not provided an official explanation, the changes are likely a response to market conditions and internal financial strategies.
