M&S, HSBC and First Direct cutting interest on regular savings accounts to 5%

M&S has cut its regular saver to 5% today, while HSBC and First Direct will follow suit tomorrow. The rate drop means new account-holders who pay in the maximum each month are likely to see between £15 and £18 less in annual interest.

If you already have one of these regular savings accounts your rate won't be affected as it's fixed for 12 months after you opened it.

Today's announcements are the latest moves in a rate-slashing frenzy by banks, following the Bank of England's base rate cut in August.

The most high-profile casualty was Santander's popular 123 account, which is halving its interest rate from 3% to 1.5% in November. Lloyds, Halifax and Bank of Scotland current account rates have also been placed under review.

What rates are changing?

Here's a round-up of the rate drops announced today:

• M&S' Monthly Saver has cut its rate for new acccount-holders (fixed for 12 months) from 6% to 5% today.

• First Direct's Regular Saver will cut its rate for new acccount-holders (fixed for 12 months) from 6% to 5% tomorrow (Friday).

• HSBC's Regular Saver currently pays those with HSBC's Advance Account or Premier Account 6% fixed for 12 months - this will drop to 5% tomorrow (Friday) for new acccounts. It also pays those with its Bank Account or Graduate Account 4% fixed for 12 months - that drops to 3% tomorrow for new accounts.

Existing customers with all the above accounts keep their current 6% (or 4%) rate until the end of their 12-month fixed term.

Still time to lock in 6% TODAY

As the First Direct and HSBC rate cuts come into effect after 11.59pm tonight, if you move fast there's still time to open one of their regular savings accounts today and lock in 6% interest for 12 months.

But both regular savings accounts are only open to existing current account holders, so you'll need to be a First Direct or HSBC current account holder to do this. If you're not, there won't be time to switch banks before the rate cuts come into effect.

For full info on the accounts' terms and how to sign up, see our Regular Savings guide.

Are these accounts still worth it?

The interest rate cuts mean that if you were to pay in the maximum £250/mth on HSBC's and M&S' regular savings accounts, the annual interest you earn would drop from roughly £90 to £75.

With First Direct, which has a maximum monthly pay-in of £300/mth, annual interest would fall from roughly £108 to £90.

Even so, these remain among the best regular savers on the market.

The next best-paying account is the Nationwide Regular Saver which offers 5% for 12 months. That rate's variable and not fixed, though Nationwide has today assured us it has no plans to change it.

The new 3% rate HSBC's Regular Saver offers Bank and Graduate Account customers is less competitive though - see our Regular Savings guide for full help bagging the best rate.

What do the banks say?

A spokesperson for HSBC said: “We regularly review all our accounts and do not make any reductions to savings rates lightly.

"We believe our products provide good value for customers, and while we have not reduced the rate on our Regular Saver account for four years, it remains very competitive.”