Savings intetest rate decrease for certain accounts

book12

I can see that every type of savings account has their interest cut except for the regular saver account. Nationwide is an example. Not that I'm complaining.

Why do they cut interest rate for certain savings accounts and not all?

eskbanker

Regular savers are often loss-leaders, i.e. allowing banks to promote a high interest rate in the knowledge that the heavily-capped contributions minimise the cost to the bank, hence the availability of 6% regular savers (same argument applies to 4-5% current accounts too).

CLAPTON

book12 wrote: »

I can see that every type of savings account has their interest cut except for the regular saver account. Nationwide is an example. Not that I'm complaining.

Why do they cut interest rate for certain savings accounts and not all?

because they are crooks and cheats : the regular savers high rate doesn't cost them much as you can only earn the rate on limited funds but it looks good on the advertising

colsten

It is a lot easier for banks to manage their exposure when they know the maximum a customer can pay in, down to a small unit like a month. Many also know exactly how long they will have their money to lend out, as the withdrawal rules on many Regular Savers are quite rigid. With instant access savings accounts, they can't know how much you deposit and withdraw when, so these are a lot riskier accounts for them and therefore they don't want to encourage people to use them lots. Fixed term savings accounts are less risky for banks and therefore have slightly better rates than instant access ones.

Having said all this, all variable rates are subject to potential cuts, including Regular Savers. FS, for instance, dropped their rate from 8% to 6% a couple of years ago.

Nothing to do with crooks and cheating. Just prudent financial management by companies that need to make profits for their shareholders.

EDIT: Look at interest rates of the so-called "ethical" firms (credit unions etc) and weep.

Flobberchops

As others have said (the "crooks and cheats" line made me laugh) it's all about protecting that precious headline rate. Why offer great rates across the board if one market-leading product is sufficient to get customers to switch to you?