Savers losing interest again

The prospect of stable or falling interest rates might cheer mortgage holders, but savers feel only pain.

This week Nationwide building society said rates on about half of its savings accounts have been cut by between 0.10% and 0.25%. It claims savers will continue to receive competitive rates, though it admits the news will be met with dismay given that the Bank of England hinted at further rate cuts this week.

To give Nationwide credit it is one of the few building societies, or banks for that matter, that publicise the changes in savings rates when the spiral is embarrassingly downward. Most keep shtum.

Nationwide chief executive Philip Williamson rams home the point, saying that while the base rate remains unaltered this year, most banks have been quietly cutting away at their savings account rates and cites Barclays, Abbey National, Bradford & Bingley, Halifax, Egg, Smile, IF, Northern Rock and the Yorkshire building society among them.

Mr Williamson says the result has been a huge inflow of funds to Nationwide, which it can no longer afford to support.

One theme appears to be the end of the road for better than average rates on internet only accounts. The Nationwide internet account paid 4.25% until this month when it was cut to 4.00%.

The Northern Rock Tracker Online suffered a 0.15% cut along with the Online Easy Access account from Bristol & West, which declined by 0.25%. Cuts at internet banks Egg and Smile, and telephone/internet operation IF add to the gloom.