Chase to cut interest rate on 5% savings account twice this month – a double whammy for savers

The Chase Saver account will reduce by 25 basis points next week, following the February base rate cut.

Offering new customers 5% AER (4.89% gross, variable) for six months, the account is currently one of the best savings accounts on the market – but this won’t remain the case for long.

How is the Chase Saver changing?

The standard Chase Saver variable rate will change from 3.5% AER (3.45% gross) to 3.25% AER (3.20% gross) from Thursday 13 February, after the Bank of England cut interest rates yesterday, 6 February.

New customers can get an extra 1.5% AER fixed interest for six months if they open a Chase Saver within the first 31 days of joining the bank, meaning they could earn 5% AER for the period.

After next week’s rate change, this account will pay qualifying savers up to 4.75% AER for six months.

Another interest rate cut lies ahead: Chase announced in December that the AER on the Chase Saver account would change from 1.25% to 1.5% below the Bank of England base rate, effective from Wednesday, 19 February.

With the base rate now 4.5%, it means the standard Chase Saver variable rate is set to fall further to 3% AER. New customers getting the boosted rate would get the extra 1.5% on top of this for their six month period — equating to a 4.5% rate.

Is the Chase Saver still a good option?

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said savers who were “enchanted” by Chase’s guaranteed bonus of 1.5% AER for new customers should make a note to review the account around its expiry date.

“Any existing customers about to see their bonus expire must make efforts to shop around for a new deal if they want to maximise the interest on their savings,” she told MoneyWeek.

“Despite the upcoming changes, Chase may still be a worthwhile choice for savers who are fed up with the rates and service of a more familiar high street bank. The current account also has its own perks of merit, such as 1% cashback and is free to use abroad.”

Springall highlighted Coventry Building Society recently launched its “4 Access Saver” which pays 4.85% AER/Gross p.a. (variable), although charge-free withdrawals are limited to four times per year.

We list the top-paying interest rates for instant access savings available right now in our “best easy access accounts” guide.