Banks proceed to cull super Isa costs
More than a dozen major providers have cut their cash Isa rates, leaving millions of customers out of pocket 
An estimated 24 million adults, about half the adult population, hold an Isa
Photo: Alamy
Around 1.6 million Barclays customers will see their Isa interest rates cut from November after the bank announced changes to its product range this week.
The changes will mean that some savers will lose as much as £200 a year in interest.
Disappointingly for Britain’s savers, Barclays is just one in a long line of providers who have been cutting their rates. Sixteen providers have slashed their rates since the launch of the “super Isa” on July 1.
Super Isas, also known as “new Isas” or “Nisas”, were expected to encourage more Britons to save, after George Osborne, the Chancellor, raised the annual cash Isa allowance that can be saved from £5,940 to £15,000.
However, a lack of attractive new accounts, and continual rate reductions on existing Isas, are likely to be discouraging British savers from putting their money into these tax-free accounts.
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Of the major banks and building societies, Barclays, Tesco Bank, NatWest, RBS , First Direct and the Chelsea and Yorkshire building societies have all either cut their rates or announced plans to do so in the coming months. Chelsea Building Society has perhaps been the most active in its changes, cutting interest rates on 17 different accounts.
Smaller providers such as Hanley Economic, Barnsley Building Society, National Counties and Virgin Money have similarly lowered their rates.
The Bank of England is expected to start raising official interest rates in 2015.
Susan Hannums, a director of SavingsChampion.co.uk, an independent savings advice service, said: “Rate reductions are widespread, so no saver holding a variable rate account is immune from the possibility of seeing a reduction in their rate.
“Even without a change in the Bank of England base rate for over five years, thousands of existing variable rate savings accounts have seen a cut in the rate, in some cases more than once.”
How providers have cut their rates
Source: SavingsChampion.co.uk
Savers reportedly held back £5.5 billion after the Budget, hoping for a better deal, but official figures released last month show that banks have cut their rates by a tenth since March’s Budget. The data, published by the Bank of England, revealed that the average rate on cash Isas was cut from 2.07pc in March to 1.84pc by May.
Banks privately admit they do not need savings deposits because of their current low levels of lending.
More: The best cash Isa ‘Nisa’ rates
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