High street banking giant NatWest has issued an urgent alert to its savings customers, confirming it will cut interest rates on a range of accounts within weeks.
What Changes Are Coming?
The bank has been emailing customers to inform them that the changes will take effect from 19 January 2026. This move follows the Bank of England's recent decision to lower the base rate and represents a direct blow to savers seeking growth on their deposits.
In its communication, NatWest stated: "We want to let you know we're changing the interest rate on your account(s). You may have heard the news that the Bank of England has decided to reduce the base rate. We've been looking at our rates too, as well as what's on offer from other savings providers right now, and we've decided to reduce some of our interest rates."
The specific reductions include:
- Digital Regular Saver: Annual Equivalent Rate falls from 5.50% to 5.25%.
- Flexible Saver (£1 - £24,999): Drops from 1.06% to 1%.
- Savings Builder (£1 - £10,000): Reduces from 1.50% to 1.25%.
- Help to Buy ISA, First Saver, and Adapt Account: All see rates cut from 1.85% to 1.60%.
The Wider Economic Context
This decision by NatWest follows a broader trend of falling interest rates. In December, the Bank of England's Monetary Policy Committee (MPC) voted to cut the base rate from 4% to 3.75%, the lowest level in nearly three years.
Governor Andrew Bailey noted that inflation in the UK has "passed the recent peak" and continues to fall, allowing for this fourth rate cut of the year. However, he cautioned that future decisions would be a "closer call," indicating a gradual and cautious path downward for borrowing costs.
Expert Advice: Look Beyond the High Street
In light of these cuts, savings experts are urging consumers to be proactive. Matthew Jenkin from the consumer group Which? warns that sticking solely with familiar high street names like NatWest, Barclays, Nationwide, and Santander can be a costly mistake.
He highlights a significant gap in the rates offered. For instance, a saver with £10,000 in a typical high street instant-access account paying 1.15% AER would earn just £115 in annual interest. In contrast, the top accounts on the market could offer up to 4.48% AER, generating £448 over the same period—a difference of over £300.
"One of the biggest mistakes you can make is limiting your search to the high street," Mr Jenkin explained. "Breaking out of your comfort zone and choosing a smaller, lesser-known provider could leave you better off."
He advises savers to always check that any alternative bank or platform is covered by the Financial Services Compensation Scheme (FSCS), which protects deposits up to £120,000 if the institution fails. While challenger banks follow the same regulations, not all automatically offer this crucial protection.
With the NatWest changes imminent, the message for savers is clear: review your options promptly to ensure your money is working as hard as it can.
