Traditional financial institutions reintroduce low savings returns below 1%, making it harder for savers to accumulate money.
Big UK Banks Lower Easy-Access Savings Rates Following Base Rate Cut
In the wake of the Bank of England's recent base rate cut to 4% in August 2025, many big UK banks have significantly lowered their easy-access savings rates, with many now offering rates below 1% on basic easy-access accounts. This contrasts sharply with more competitive savings accounts and alternatives outside the major banks which still offer rates over 4%.
Just a year ago, in August 2024, the five biggest banks paid less than 2% on their easy-access accounts. Fast forward two years and four bank of England base rate hikes, and the average rate these five banks paid on a £10,000 deposit saved in their basic easy-access accounts was 1.54%. However, with the recent rate cut, Santander's Everyday easy-access account now pays 1% on savings, while Barclays, NatWest, and Lloyds pay near 1% on their most flexible easy-access accounts.
In comparison, some challenger banks and building societies still offer easy-access rates around 4.1% or slightly higher, though often with restrictions such as limited withdrawals or linking to other products. Examples include Coventry Building Society and Tesco Bank at about 4.1% and Charter Savings Bank offering 4.31% (not flexible ISAs).
The rate cut also led to some banks lowering existing rates by more than the base rate fall, e.g., Atom Bank cutting from 4.51% to 3.93%, Skipton reducing cash ISAs by 0.5%. This reflects a broader trend of tightening returns for savers.
The top easy-access deals without strings attached pay around 4.45%, but these are often conditional or offered by smaller institutions. Examples include Chase at 4.75% for new clients who open a current account, and Cahoot/Santander Simple Saver at 4.55% interest paid monthly or annually.
Savers must ensure their savings deal pays above the current CPI inflation rate of 3.6%. It is crucial to shop around for the best deals to maximise returns, as the current trend indicates that big banks are cutting easy-access savings rates, making them less attractive for savers requiring flexibility.
In conclusion, the current trend after the Bank of England's base rate cut is that big banks are cutting easy-access savings rates to below 1%, making them less attractive for savers requiring flexibility, while some smaller institutions and challenger banks maintain higher but often conditional rates around 4% or slightly more.
- The banking industry, including major UK banks, has seen a decrease in easy-access savings rates following the Bank of England's base rate cut to 4%.
- In comparison, some challenger banks and building societies still offer easy-access rates around 4.1% or slightly higher, often with restrictions.
- Savers should aim to find savings deals that pay above the current CPI inflation rate of 3.6% to maximize their returns, as the trend suggests that big banks are cutting easy-access savings rates.
- Despite lower savings rates offered by big banks, some smaller institutions and challenger banks offering higher but often conditional rates around 4% or more still exist in the personal-finance sector.
