Fresh blow to savers as interest slashed on Marcus and Saga top easy-access accounts
Savers have been dealt another blow after the interest rates of the two top-paying easy-access accounts were today cut to 1.3% – and existing customers will also be affected in the next few weeks.
The drops in interest paid on the Marcus and Saga easy-access accounts come just a day after NS&I announced major rate cuts for Premium Bonds and other savings accounts, while the rates on prominent interest-paying current accounts Santander 123 and TSB's Classic Plus will also be cut in May.
Here's a summary of the cuts announced today:
- The underlying interest rate on the popular Marcus savings account has been cut from 1.35% to 1.3%. Marcus launched in September 2018 with a market-leading rate of 1.5%, which included a 0.15% bonus, but has since gradually reduced this, and since December it's offered just 1.35% with no bonus. (Bonus rates are temporary interest hikes to attract new customers, which essentially act as a minimum rate guarantee during the introductory period.)
Now the rate's dropped to 1.3% for new savers, while existing customers will see rates fall by 0.05 percentage points from Tuesday 10 March (though the exact amount you'll earn depends on what, if any, fixed bonus you have on your account – see full Marcus rate cut info below).
- The headline rate on the Saga easy-access savings account has been cut from 1.35% to 1.3% for new customers. Existing customers will see their rates drop by 0.05 percentage points, again from Tuesday 10 March – see full Saga rate cut info below.
While they have different brand names, the Marcus and Saga easy-access accounts are operated by investment banking giant Goldman Sachs.
For help on searching out the best interest rates, see our Top Savings Accounts guide.
If you open a new Marcus account from today, you'll be offered an interest rate of 1.3% AER variable. So if you opened an account with £1,000, you'd have a projected balance of £1,013 after 12 months.
If you're an existing customer, your underlying interest rate will drop from 1.35% to 1.3% on Tuesday 10 March. Crucially though, any fixed bonus you have will remain in place until it expires 12 months after you took out the account or renewed the bonus.
For existing customers, the fixed bonus you have will depend on when you took out the account or last renewed the bonus, as shown in the table below:
|1.5%, incl 0.15% bonus
|1.45%, incl 0.15% bonus
|1.45%, incl 0.1% bonus
|1.4%, incl 0.1% bonus
You can check whether you've got an active fixed bonus – and when this will expire – by logging in to your Marcus account and clicking 'View' next to the account name. You'll see the bonus details on the right-hand side (or towards the middle if you're using a mobile).
If you open a new Saga easy-access account from today, you'll be offered an interest rate of 1.3% AER variable, including a fixed 0.2% bonus for the first year. So again, if you opened an account with £1,000, you'd have a projected balance of £1,013 after 12 months.
If you're an existing customer with a Saga easy-access account, your underlying interest rate will drop by 0.05 percentage points from Tuesday 10 March. Any fixed bonus you have will remain in place until it expires.
You can check the rate you're getting by logging in to your online account.
'A further blow to hard-pressed savers'
Helen Saxon, banking editor at MoneySavingExpert.com, said: "These latest rate cuts from Marcus and Saga will be a further blow to hard-pressed savers, who – again – are left scrabbling around to get a return on their money.
"But the cuts also serve as a very clear reminder to everyone with a savings account to check what rate they're getting. See 1.3% as the minimum you should be getting on easily accessible savings, then look for other options – perhaps fixed savings or higher rates with current accounts – to maximise your interest."
Are there better savings options out there?
If you're a new customer looking to put money in an easy-access account – ie, one that gives you flexibility to make withdrawals – the top rate is now from Virgin Money, at 1.31% AER variable. However, it only allows two withdrawals a year, so stretches the definition of 'easy access'.
If you need to make regular withdrawals, you could look at the Post Office, which offers 1.3%, including a fixed 0.8% bonus for 12 months, and can be opened with £1 (withdrawals are unlimited).
However, if you're an existing Marcus or Saga customer, weigh up carefully whether you should ditch and switch after your rate drops in early March:
- If you have a Marcus account with a fixed bonus, you'll likely be better off sticking with it for now as the bonus means it'll still pay more (1.45% or 1.4%) than the top easy-access accounts do right now – though check if this is still the case on Tuesday 10 March. In any event, it's worth checking when your bonus expires and remembering to reconsider your options then.
- If you have a Marcus account without a fixed bonus, it's worth checking the rates of the top-paying savings accounts on 10 March to see if it's worth switching. Based on the rates right now, you'd be able to earn a smidgeon more by switching to Virgin Money's 1.31% account, but you'd need to weigh up firstly whether it's worth the hassle and secondly whether you're happy with an account that only allows two withdrawals a year.
- If you have a Saga account, check the rate you're getting in early March and weigh up if it can be beaten. Again, what you'll earn from 10 March will depend on the size of your fixed bonus – some with the 0.25% fixed bonus first offered by Saga may still earn more than the current top-paying account after 10 March, but check.
Alternatively, you can get better returns on your cash by opening a fixed-rate account – which will give you less flexibility with withdrawals – or with some current accounts.