Advisers have backed the importance of cash in financial planning despite data showing top rates have tumbled in recent weeks.
The research, published yesterday by Moneyfacts (September 9), showed several rate cuts had been made to some of the top deals across various sectors since the end of August, causing a ripple effect on other saving deals and lowering the overall rates offered by the market.
Some rate-leading easy access accounts — which generally pay higher interest than current accounts while giving flexibility to withdraw money when needed — slashed their rates after Virgin Money lowered its ‘Double Take E-Saver’ (previously the top rate in the market) from 1.5 per cent to 1.43 per cent.
Within the days that followed, a domino effect saw Marcus by Goldman Sachs drop the rate offered in its online savings account from 1.49 per cent to 1.44 per cent, Cynergy Bank replaced their version of this account at 1.45 per cent (previously 1.50 per cent) and Ford Money withdrew its deal to new customers.
Fixed rate bonds also saw reductions. Bank of London and The Middle East cut its five-year fixed deal’s ‘expected profit rate’ twice in the space of a week, from 2.75 per cent to 2.5 per cent on August 28 and then down to 2.3 per cent on September 4.
The expected profit rate on BLME’s product was previously the top rate in the sector. As BLME is a Shariah compliant product, the bank offers an expected profit rate rather than an interest rate which is in line with the Shariah concept that money should not in itself create money.