Tesco joins banks cutting rates for loyal savers as internet account falls to just 0.35%
TESCO has become the latest bank to slash interest rates for loyal savers - so any money put away for a rainy day is worth even less.
The banking arm of the supermarket said that from October 24, interest on its easy-access Internet Saver account will fall from 0.55 per cent to 0.35 per cent, while its Instant Access Cash Isa falls from 0.65 per cent to 0.35 per cent.
Its Instant Access Savings rate will also drop, from 0.4 per cent to 0.3 per cent - meaning customers earn just £3 a year on £1,000.
The news comes as banks across the board slash the interest they pay customers who deposit money with them.
Nationwide recently reduced its rates on closed easy-access accounts, such as its Flexclusive Online Saver, from 0.6 per cent on balances up to £10,000, to just 0.3 per cent.
The bank’s e-Savings account now pays just 0.1 per cent, and its Limited Access Saver, Limited Access Online Saver and e-Savings Plus dropped from 0.75 per cent to 0.5 per cent.
Andrew Hagger, a personal finance expert, said: "You should avoid the big high street banks because their savings rates are poor.
"There are a lot of providers out there who people might not have heard of but they are just as safe.
"Which savings account you chose depends on what you want from your money.
"If you are looking for instant access [where you can withdraw the money at any time] then the best rate at the moment is 1.5 per cent, available with online accounts with Marcus or Cynergy Bank.
"If you are looking for a higher rate you need to lock your money away in a fixed rate deal.
"Chartered Savings Bank is currently offering 2.05 per cent if you lock your money for 18 months, and Atom Bank pays 2 per cent for one year.";
Even if UK interest rates rise, banks do not always pass on the increase to customers.
But there are some good deals out there.
And there are a number of savings accounts aimed at children too.
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