The Goldman Sachs Grinch: Marcus Bank to cut easy-access rates AGAIN… just days after NS&I slashed accounts to as little as 0.01%
- Marcus cut its easy-access rate from 1.05% to 0.7% in October
- It will cut it again on 11 December as cuts to savings rates continue
- The best buy easy-access rate pays just 0.7% now as rate cuts from NS&I filter through the market
Marcus is making another cut to its easy-access account as savings providers continue to slash rates on the back of brutal cuts by National Savings & Investments.
The UK savings arm of Goldman Sachs will cut its easy-access rate from 0.7 per cent to 0.5 per cent in just over a fortnight on 11 December, just two months after it cut the rate from 1.05 per cent.
It made that September cut, its deepest ever, just days after NS&I announced it was reducing rates on its easy-access accounts to as low as 0.01 per cent, and news of the latest rate reduction comes in the same week as those cuts were introduced.
Marcus has made the second cut to its easy-access account in the last 2 months. It will pay savers just 0.5% interest from 11 December
First Direct and HSBC also handed savers a cut of 1.75 percentage points on its regular saver earlier this week.
It means Marcus’ account, which paid as much as 1.5 per cent for a year after it was launched in September 2018, now fails to beat inflation, which rose to 0.7 per cent last month.
The bank, which took in roughly £1billion a month from savers when it launched its then market-leading account two years’ ago, previously reduced its rates to 1.45 per cent and then 1.3 and 1.2 per cent in recent months, while it also removed the account from sale to new customers in June this year.
Rate cuts elsewhere saw savers pile into the account, but those lucky who were lucky to get in have now faced a succession of cuts themselves.
The quick-fire cut in just over two weeks’ time comes after it changed its terms and conditions last October to allow it to give customers just 14 days’ notice ahead of any rate cut, where before it let them know two months’ beforehand.
It hoovered in so much cash from UK savers that it had to close its doors in June to new customers – it had raked in £21billion, making it close to breaching banking rules.
And Marcus, whose parent bank was bailed out by the US taxpayer during the last financial crisis in 2008, is not the only provider to hand savers a succession of bad news in the last few months.
When it announced its cut from 1.05 per cent to 0.7 per cent at the end of September, the best buy easy-access stood at 1.1 per cent and five highest-paying accounts paid an average of 1 per cent, according to Savings Champion.
Today, the best buy rate has dropped to 0.7 per cent and the top five average to 0.6 per cent, while easy-access rates overall pay as little as 0.21 per cent on average, according to separate analysis from Moneyfacts.
|Date||Best buy easy-access rate||Top 5 easy-access average rate|
|Source: Savings Champion|
Savings banks have been inundated with money since NS&I’s announcement of its rate reductions two months’ ago, filling up their books and requiring them to slash rates as a result.
Challenger bank Paragon, which removed its 0.65 per cent paying easy-access account from sale this week, said September was its busiest ever month as deposits flooded out of NS&I ‘at an unprecedented rate’.
This was even despite the fact that many people who tried to withdraw money from NS&I had, and continue to have, problems doing so.
Paragon Bank’s savings direct, Derek Sprawling, said he anticipated billions more pounds would continue to inundate the market as savers looked for the best rates, even if those rates were much lower than they had been previously.
Saga, which has its easy-access account provided by Marcus, has also cut its rate from 0.7 per cent to 0.5 per cent, although that comes with a 0.1 percentage point bonus which expires after a year.
James Blower, an advisor to savings banks and founder of The Savings Guru, said savings rates were ‘collapsing generally as the NS&I cuts take effect.’