The UK banking giant NatWest has begun notifying customers of a significant reduction in interest rates across its savings products, with changes set to take effect from 19 January. The notice, sent via email, outlines rate decreases on several key accounts, including the Digital Regular Saver, Flexible Saver and Help to Buy ISA.
This shift comes in response to the Bank of England’s December decision to lower the base rate from 4% to 3.75%, marking the fourth such cut this year. NatWest stated that it had “been looking at our rates too, as well as what’s on offer from other savings providers right now”, before announcing the reductions.
Savings Rates Lowered across Key Account Types
NatWest’s new rates will affect a broad selection of savings accounts, with cuts ranging from minor adjustments to more noticeable drops. Among the most impacted is the Digital Regular Saver, which will see its Annual Equivalent Rate (AER) decline from 5.50% to 5.25% for balances up to £5,000. Amounts above that will drop from 1.06% to 1.00%.
Other reductions include the Flexible Saver for balances of £1 to £24,999, decreasing from 1.06% to 1.00% AER. The Savings Builder account, designed to reward consistent deposits, will go from 1.50% to 1.25% AER for balances up to £10,000.
The changes also extend to tax-free products. The Help to Buy ISA, First Saver, and Adapt Account will all see their rates reduced from 1.85% to 1.60%. According to NatWest, the decision was prompted by wider economic conditions and followed “the news that the Bank of England has decided to reduce the base rate.”
Detailed figures published by the bank show that accounts such as the Primary Savings and Limited Edition Saver ranges will also see decreases across multiple balance tiers. For example, Limited Edition Saver Issue 2 will offer 3.30% AER for balances between £250,000 and £3 million, down from a previous 3.50%.
Customers Urged to Shop beyond the High Street
Financial experts are encouraging savers to consider alternatives outside of traditional high street banks in light of the changes. According to Matthew Jenkin from the consumer group Which?, individuals who continue to rely solely on familiar banking names may lose out on significant returns.
“One of the biggest mistakes you can make when looking for the best home for your savings is limiting your search to the high street,” he said. Jenkin added that while major banks feel secure, “breaking out of your comfort zone and choosing a smaller lesser-known provider could leave you better off.”
According to data from Moneyfacts, the interest gap between high street and challenger banks is particularly wide on instant-access products. In one example, depositing £10,000 in an account paying 1.15% AER (close to the current high street average) would yield just £115 per year. In contrast, placing the same amount in the highest-paying account for larger balances, offering 4.48% AER, would generate £448, a difference of over £300.
Jenkin stressed the importance of checking whether unfamiliar banks are covered by the Financial Services Compensation Scheme (FSCS), which protects up to £120,000 per customer should a financial institution fail. While challenger banks must follow the same regulatory framework as major players, not all are FSCS-protected.
