Half a million more savers at Royal Bank of Scotland and NatWest will see their interest rates cut by the end of the year as part of what banks are describing as a "simplification" of their product ranges.
RBS, which owns NatWest, is moving six million customers into new accounts. Of these, around one million e-Savings customers experienced rate cuts in July. The e-Savings rate fell from 1pc to 0.75pc for balances above £25,000 and from 1pc to 0.5pc for below £25,000.
Now it has emerged that a further 500,000 savers will be moved onto a lower interest rate by January.
The move is part of a growing trend among banks. Last week, Barclays said it would shift more than two million customers in the bank's 11 closed Isa accounts into its Instant Cash Isa 1 on November 5. Around 1.6 million savers will have their incomes cut and some will lose as much as £200 a year.
Both banks insist the changes are designed to simplify the range of products available to customers and make it easier to save.
An RBS and NatWest spokesman said the majority of affected customers will benefit from a rate rise. The bank moved three million Isa customers into new accounts in January and 1.9 million of these saw a rise, the spokesman said.
“We want to be a bank that customers can trust, so, we’re striving to make saving with us simple and fair," the spokesman said. "We’ve removed old Isa accounts already and we will remove old savings accounts to ensure that all of our existing customers will get the same rates as new customers. For the majority that means an increase in their interest rate”.
The City watchdog, the Financial Conduct Authority, last year launched an inquiryinto the way banks treated loyal savers. Among other things, it raised concern over the use of “teaser” rates to lure savers. These temporary bonuses typically fall away after a year, leaving those who forget to move their money earning very little on their savings.
Many high street banks and building societies, including Santander and Nationwide, have since moved to simplify their savings products.
Barclays' rate cuts
More than two million customers who have money in one of the bank's 11 closed Isa accounts will be automatically transferred to the bank's Instant Cash Isa 1. The account pays 1.28pc on balances up to £15,000, 1.38pc on balances up to £30,000 and 1.48pc on higher amounts.
Around 1.6 million savers will have their incomes cut because the Instant Cash Isa 1 pays a less attractive interest rate than many of the closed accounts.
Barclays said the vast majority of savers who will see their rates reduced will only lose an average of £2.22 a month.
Some Barclays Isa customers will benefit, however. More than a third of savers, around 744,000, will see their rate stay the same or rise as a result of the changes. Accounts such as the Barclays Cash Isa and the Tax Beater Isa pay pitiful rates of interest, at 0.1pc and 0.56pc, respectively.
Lee Chiswell, head of savings at Barclays, said: "We want to simplify the way we do business with our savings customers. These changes will make it easier for our customers to understand their products, and easier for our staff to serve them. Customers will also have the added benefit of being able to Transfer-in."