Possible changes to savings rate with Chase from 13 May

vernall

Just logged into Chase and there’s a banner that says things are changing from 13 May

We're changing the way we calculate the interest rate on your saver accounts. We used to set our own variable saver rate, but we'll now tie our Chase saver interest rate to the Bank of England base rate, which you can find on their website. This means 5 business days after their rate changes, the annual equivalent rate (AER) of your Chase saver account will also change to 1.15% below the Bank of England base rate. AER is the interest you earn each year, including any prior interest payments

So currently staying at 4.10% then

la531983

To be fair it doesnt actually change anything as it stands, and they have always increased it with the rate rises, stands to reason they will do the same when it goes the other way, they are just clarifying the methodology.

VT82

They are doing it so they can pass on cuts to Bank Rate more quickly, to keep their interest costs down. Previously they would have had to decide what to when Bank Rate is cut after the Bank of England make the announcement, and then give savers 14 days' notice before rates are actually cut. Now they can feel the benefit on their cost of savings within 7 days. Pretty sneaky.

I bet in the future as and when Bank Rate is expected to go up rather than down, they will change it back so they can delay increasing their savings rate.

steven141

At the moment the base rate minus 1.15% is 4.1% so it is currently following this. 

Kim_13

la531983 said:

To be fair it doesnt actually change anything as it stands, and they have always increased it with the rate rises, stands to reason they will do the same when it goes the other way, they are just clarifying the methodology.

It doesn’t change anything as it stands, but overall with such a wide margin to the Base Rate, savers are unlikely to be better off. If the base rate returned to 1.5%, savers would be left with the kind of derisory rate they had for over a decade (and those rates were more understandable because the base was most commonly 0.5%.)

Chase were slow to respond to increases - the base rate has increased 11 times since Chase launched the Saver account, but they only increased the rate twice. The change is designed so they can cut the rate quicker than they put it up - had it said the rate would be no lower than 1.15% below, then you could give the benefit of the doubt, as the rate might be higher than that minimum based on market conditions.

Tracker products usually entice me, but not this one. The Chase Saver hasn’t been competitive since the 1.5% days, so no money for me to move.

ToastLady

Agree that the Chase savings account isn't competitive. It's just handy for keeping monthly spend in and gaining something, moving to current a/c when needed within the app, rather than faff with transfers from one bank to another, especially if out and about.

cloud_dog

The Chase announcement pretty much confirms that their savings rate will always be below par and likely 0.5% to 0.75% below future top paying providers.

RedImp_2

ToastLady said:

Agree that the Chase savings account isn't competitive. It's just handy for keeping monthly spend in and gaining something, moving to current a/c when needed within the app, rather than faff with transfers from one bank to another, especially if out and about.

I guess it depends on which bank you use but it’s no more pfaff to me to transfer from my other bank than to go into Chase to do it.  And it’s pretty much instantaneous 

RedImp_2

Kim_13 said:

la531983 said:

To be fair it doesnt actually change anything as it stands, and they have always increased it with the rate rises, stands to reason they will do the same when it goes the other way, they are just clarifying the methodology.

It doesn’t change anything as it stands, but overall with such a wide margin to the Base Rate, savers are unlikely to be better off. If the base rate returned to 1.5%, savers would be left with the kind of derisory rate they had for over a decade (and those rates were more understandable because the base was most commonly 0.5%.)

Chase were slow to respond to increases - the base rate has increased 11 times since Chase launched the Saver account, but they only increased the rate twice. The change is designed so they can cut the rate quicker than they put it up - had it said the rate would be no lower than 1.15% below, then you could give the benefit of the doubt, as the rate might be higher than that minimum based on market conditions.

Tracker products usually entice me, but not this one. The Chase Saver hasn’t been competitive since the 1.5% days, so no money for me to move.

With this and the changes to current account cashback does feel like Chase are giving up !

Hoenir

Kim_13 said:

la531983 said:

To be fair it doesnt actually change anything as it stands, and they have always increased it with the rate rises, stands to reason they will do the same when it goes the other way, they are just clarifying the methodology.

Chase were slow to respond to increases - the base rate has increased 11 times since Chase launched the Saver account, but they only increased the rate twice. 

Banks have to need the cash. There's no commercial sense in taking in deposits and leaving the money on the balance sheet serving no purpose. 

TheBanker

RedImp_2 said:

Kim_13 said:

la531983 said:

To be fair it doesnt actually change anything as it stands, and they have always increased it with the rate rises, stands to reason they will do the same when it goes the other way, they are just clarifying the methodology.

It doesn’t change anything as it stands, but overall with such a wide margin to the Base Rate, savers are unlikely to be better off. If the base rate returned to 1.5%, savers would be left with the kind of derisory rate they had for over a decade (and those rates were more understandable because the base was most commonly 0.5%.)

Chase were slow to respond to increases - the base rate has increased 11 times since Chase launched the Saver account, but they only increased the rate twice. The change is designed so they can cut the rate quicker than they put it up - had it said the rate would be no lower than 1.15% below, then you could give the benefit of the doubt, as the rate might be higher than that minimum based on market conditions.

Tracker products usually entice me, but not this one. The Chase Saver hasn’t been competitive since the 1.5% days, so no money for me to move.

With this and the changes to current account cashback does feel like Chase are giving up !

No, they're not giving up. They were a new enterant to the UK and offered loss-leading rates to drum up business. Now they've done that, they are probably keen to reduce their expenditure.