Savers face a fresh squeeze in March as 10 banks and building societies prepare to cut interest rates, with nine reductions due within the next fortnight.
Although the Bank of England held rates steady in February, providers are continuing to adjust products following December’s cut from 4% to 3.75%. Analysts at personal finance site Finder, have been tracking savings rate changes in the wake of recent base rate decisions.
On 1 March, TSB reduced rates across eight accounts, including its Cash ISA Saver and Easy Saver, although the new rates have yet to be confirmed. On 3 March, Spring, part of Paragon Bank, lowered its Easy Saver rate to 3.82% AER from 4.11% AER.
Further cuts follow on from this Friday, as NatWest (NWG.L) and RBS adjust rates on eight accounts in total, with four falling to 1% AER. On 8 March, The Co-operative Bank will trim rates on six accounts, including its Cash ISA and Smart Saver, both of which will move from 1.46% to 1.4% AER.
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Coventry Building Society will make changes on 9 March, reducing its Moneymanager account to 1.25% from 1.5% and its Monthly Saver to 3% from 3.15%.
Barclays (BARC.L) will cut its Rainy Day Saver from 4.21% to 3.96%. Its Everyday Saver and Instant Cash ISA will both fall from 1.06% to 1%.
On 12 March, HSBC (HSBA.L) will lower rates on four accounts, including the Online Bonus Saver, which will drop from 3.5% AER to 3.35% AER. On the same day, First Direct, part of the HSBC Group, will reduce its Savings Account from 1.15% to 1.05% and its Bonus Savings Account from 3.5% to 3.35%.
At the end of the month, Virgin Money will cut the rate on its M Saver, M Plus Saver and Club M Saver accounts from 2% AER to 1.75% on balances up to £25,000.
Kate Steere, personal finance expert at Finder, said the divergence between leading and lagging rates was becoming more pronounced.
“These rate drops emphasise a serious gap between the highest and lowest rates on the market – with some falling as low as 1%. Take the current leading rate of 4.55% – and that’s a difference of £682 in interest on the average savings of £19,214 after just one year.
“Unfortunately, there’ll be little for savers to smile about this spring, as I think we’ll see the base rate cut to 3.5% in March, thanks to a lower than expected inflation rate in January. If I’m correct, banks will see this as a free pass to slash even more rates, leaving savers with fewer competitive options,” she adds.
“The most important thing is to make sure you’re earning more than the rate of inflation – otherwise your savings are essentially losing value. There are still deals above 4% on the market.
“For example, Tembo’s HomeSaver is currently offering a boosted 4.55% on balances up to £25,000 as long as you keep the account open for 12 months, while Chase still has a rate of 4.5% on its boosted Saver. If it’s a cash ISA you’re looking for – there are competitive options with eToro (4.61% AER), Plum (4.42% AER) and Moneybox (4.39% AER).”
UK households are often looking for ways to make their money go further amid the cost of living crisis, and savings accounts could help you improve your finances this year.
The Bank of England‘s (BoE) decision to hold interest rates at 3.75% last month did not bring relief to mortgage holders, but was good news for savers as it influences the rates set by banks and building societies on their products.
For now, though, many leading accounts continue to offer rates comfortably above 3% inflation and the current policy rate, enabling savers to secure positive real returns. For households seeking to rebuild financial resilience, locking in these deals may prove prudent before the interest rate cycle turns.
Experts urge savers to shop around for the best deals and review their accounts regularly, as many may still be sitting on products that fail to beat inflation.
Alice Haine, personal finance expert at Bestinvest, said: “Those keen to preserve returns on bank and building society savings should hunt out the best deal they can find while they can. With further rate cuts expected in 2026, savings rates are likely to drift lower. Yet for many savers, the UK’s rising tax burden is proving even more corrosive.
“The UK has been hit with a series of tax changes in recent years, that will significantly increase personal tax burdens and erode disposable incomes. Whether it’s frozen income tax thresholds, a future hike in savings income tax, a static personal savings allowance, or cuts to the annual capital gains tax exemption and dividend allowance – savers and investors will see more of their returns swallowed up by tax over time. This is why a tax-efficient savings strategy is imperative.
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“The countdown to the end of the tax year is under way, with [four] weeks until allowances reset at midnight on 5 April. Savers can shelter up to £20,000 in a tax-free individual savings account (ISA) this financial year, or they can direct surplus cash into a pension, with both options protecting returns from the tax.”
In her autumn budget in November, chancellor Rachel Reeves announced changes to the tax payable on savings income. From 2027-28, the basic rate on savings will be increased by two percentage points to 22%, the higher rate will be increased by two percentage points to 42% and the additional rate will be increased by two percentage points to 47%. This will take effect from 6 April 2027.
Until recently, savers could earn a market-leading 5% for three months, but the best offer is now 4.5% from AlRayan bank via the Prosper platform. Interest is paid at maturity, and a minimum investment of £10,000 is required to open the account.
OakNorth via the same Prosper platform pays 4.4% on a one-year term. Same conditions as above, so interest is paid at maturity, and a minimum of £10,000 is required to open the account.
The Union Bank of India has a 4.23% deal for 12 months with which requires £5,000 to open and you can invest up to £340,000.
Online banks typically offer higher rates than traditional bricks-and-mortar branches, which translate into better returns, giving you a more efficient way to save and reach financial goals.
If you prefer to go with a familiar name, the high-street lenders have slightly lower offers, but are still above inflation.
Tesco (TSCO.L) Bank offers a one-year fixed-rate savings account that pays 4% annually, with the minimum balance required being £2,000. However, you can invest up to £5m.
NatWest (NWG.L) has a fixed-term savings account offering 3.3% for one year. The minimum deposit is just £1 and interest will be paid on the first business day of every month and on the maturity date.
Unlike easy-access products, where interest rates can vary, fixed-rate accounts earn a set rate of interest for the period you choose, whether that’s six months or several years. Those are the most common deals, but some offers go up to 10 years and over.
You must leave your initial deposit for a fixed period without making withdrawals. If you touch your money, you forfeit any interest.
Easy-access savings accounts let you withdraw your money without notice. With that ease of access come lower interest rates, but they are a good option for those who think they might need their money in a hurry.
Be aware that rates on these accounts are variable, which means they can go up or down. You will be notified of any change ahead of time.
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Chase (JPM) has a 4.5% offer for 12 months that you can access with £1.
Mansfield BS has a 4.25% offer which you can open from £1 and save up to £400,000. If you were to put £1,000 in this account, your balance after 12 months would be £1,042.50.
Coventry has a similar 4.25% deal which you can access with only £1 and invest up to £1,000,000. Interest is paid monthly or annually.
There are even higher-paying easy-access accounts, but they are not for new customers. Santander’s (BNC.L) Edge Saver, for instance, offers 6%, but is only available to current account holders.
Can’t decide on whether you want to put your money away and not touch it for a long time or keep it accessible at all times? Maybe you should consider a notice savings account.
Notice savings accounts require you to give notice to your savings provider before you can withdraw your funds.
These are ideal for those who know when they might need their cash but don’t want to face the temptation of dipping into it at any time.
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You need to give the bank or building society a set advance warning before you can withdraw your money. It’s usually between 30 and 120 days, though this can be longer.
OakNorth Bank via Prosper has a 4.5% deal that requires £10,000 to access. The notice period is 120 days and it is only available to new customers.
The same platform has a deal with GB Bank that offers 4.35% on a 65 day notice account that requires £10,000 to open. For a shorter period, you can go with a 35-day account that will pay you 4.3% under the same terms.
Interest rates with notice accounts are variable, which means they could go up or down over time.
For those looking to make the most of their cash savings, regular savings accounts can offer returns of up to 7.5%.
Most regular savings accounts require you to put money away each month with interest paid yearly. It is not uncommon for the offer to be available only to current customers.
Principality offers 7.5% in a six-month regular saver account. You open an account and pay in up to £200 each month. Interest is calculated on the money in the account each day and paid six months after opening.
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Zopa pays 7.1% on monthly deposits of up to £300. Account holders also receive 2% AER interest on all balances and 2% cashback on bill payments and there is no minimum monthly deposit.
The Co-op offers 7% on its regular savings account, allowing deposits of up to £250 a month.
First Direct pays the same 7% but you can save £300 every month.
Every deal mentioned here is covered by the Financial Services Compensation Scheme, so you are protected up to £120,000 or double that if it’s a joint account.
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