Here one minute, gone the next. That's what seems to have happened to my M&S Advantage Cash Isa interest rate. I only signed up a few weeks ago on the basis that it offered one of the best interest rates around. But now the bank, part of HSBC, says it is cutting the rate on Friday from 3.1% to 2.5% (this includes a 1% bonus).
It is by no means the first Isa provider to make such a move. Barclays, Halifax, NatWest and First Direct have all been at it, chopping or pulling their deals of late. But that doesn't stop me from being annoyed, especially as the M&S Isa was one of the few that seemingly didn't come with a big catch, such as having to sign up to a current account. The rate, which M&S has been paying since January, was also one of the highest available without having to tie your money up for a year or more.
So what is going on with savings rates? Interest rates haven't fallen again yet savings providers are cutting the rates on their accounts.
M&S tells me it had to do the dirty because in the past week it has had a huge increase in the volume of subscribers thanks to Barclays et al cutting their rates the previous week. Cynics may also suggest some providers were offering higher rates for the first few weeks of the new tax year, knowing full well they would cut them as soon as lots of people had signed up.
It is now impossible to get an interest rate of above 3% for your cash Isa, according to Moneyfacts, unless you are prepared to lock your money away for at least a year. There is consolation, however, in that this is not as bad as it sounds. Once you take inflation into account the real return you are getting is much more attractive. As Ed Bowsher from lovemoney.com points out, the real return on the top instant access account is actually 3.95%.
Saver apathy has crept over me and I am now thinking I can't be bothered to move my money again, even though I would be prepared to tie it up for a year and could get a better deal. What are other savers doing? Did you bother moving accounts this year? Have you also seen your rate cut and can you be bothered to move again?
