Lloyds Bank customers have been urged to be mindful of a key date when their savings account rate will fall by more than 3%.
A saver contacted the provider over social media as their account was soon to mature. They asked: “My monthly saver is about to mature in February and pay the interest.
“It will then revert to a standard saver. Can I then reopen another monthly saver for another year?”
The Lloyds Monthly Saver has a 12-month term and if you have this account, it’s worth making a note of when it matures, as the rate will drop significantly.
The account pays 5.25% but when the term ends, the account becomes a Standard Saver, paying just 1.8%, a large drop of 3.45 percentage points.
Fortunately, savers coming to the end of the term can retain the rate as long as they take action. Lloyds said in response to the customer: “After 12 months, you’ll get your interest and the account will change to a Standard Saver. You can then open a new Monthly Saver and save for another 12 months.”
You can deposit up to £250 a month into the Monthly Saver, which has a fixed rate of 5.25% for the 12-month term. Savers have the flexibility to withdraw funds from the account as many times as they want, with no charges for this. This can be done online, but only to another Lloyds account.
The Lloyds website advises: “Bear in mind you may not be able to replace what you withdraw. This is because of the monthly deposit limits.”
Savers may be tempted to lock in a fixed rate as the base interest rate may move again soon, with the potential for savings rates to drop.
Peter Briffett, CEO at financial platform Wagestream, said things are still up in the air: “As it stands, many predict the base interest rate in the UK will fall – but things can always change.
“This figure has a big impact on the products and rates offered by financial services providers – particularly on mortgages, credit cards, loans and saving rates – so it’s important for consumers to keep an eye on the base rate and what it means for them.”
He urged savers to consider the different types of savings products they can go for, and to make sure their choice suits their needs.
Mr Briffett said: “People working towards longer-term goals often find a better rate by locking up some money in a fixed rate savings product, while those with shorter-term goals sometimes find higher incentive rates that only run for one year, for example. It’s important to always read the small print, and be aware of terms before opening a new account.”
One trend the Wagestream team has noted is the shift towards workplace savings schemes, also known as payroll savings.
The expert said: “Around two million Wagestream members in the UK, for example, are now able to set aside savings straight from their payslip.
“Many are earning double the interest they’d been getting through their high street savings account, and around a third of them are saving for the first time ever – because it’s an easy way of starting to save small amounts, without even having to think about it.”
