A MAJOR online bank with millions of customers will make a huge change in just two days.
Monzo Bank has slashed the interest on one of its savings accounts in a fresh blow for savers.
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Earlier this month, the Bank of England lowered the base rate from 4.25% to 4%, marking the fifth interest rate cut since 2020.
The base rate is used by lenders to determine the interest rates offered to customers on savings and borrowing costs.
The move can be good news for homeowners as it means that mortgage rates are lowered.
However, savers can lose out as the interest rate they earn on their savings can also drop.
In light of the recent cut, Monzo has said it will lower the interest on its s Personal Instant Access Savings Pots from from 3.25% AER to 3.00% AER.
AER, or Annual Equivalent Rate, is used to show you what you could earn from a savings account over a year.
A lower AER means you will have less money in your savings account over a year because it indicates a lower rate of interest being paid on your savings.
Monzo, which only operates online, said it would make the changes automatically on August 26 2025.
Back in May, the bank lowered interest on the same account from 3.50% AER to 3.25% AER.
The bank said customers could move their money elsewhere at any time.
Monzo Personal Instant Access Savings Pots are a way to save money while still being able to withdraw it whenever you need it.
They’re used by customers as a flexible option for saving towards short-term goals, like building an emergency fund or saving for a holiday.
MORE BANKING CHANGES
And Monzo is not the only bank which is lowering interest rates on accounts.
The Co-operative Bank also said it would cut interest rates on 36 savings accounts.
The bank began the cuts on some accounts on August 14 and said the final changes would take place on October 22.
Earlier this month, Co-op’s Base Rate Tracker accounts saw interest rates drop from 4% to 3.75% and from 3.75% to 3.5%.
So for example, if you had £1,000 deposited for 12 months, the interest earned at 4% would have been £40.
From October 22, various other accounts will experience cuts, including the Future Fund, which will see its rate fall from 1.53% to 1.46%, and the Online Saver, dropping from 2.12% to 2.06%.
SAVING ACCOUNT TYPES
THERE are four types of savings accounts fixed, notice, easy access, and regular savers.
Separately, there are ISAs or individual savings accounts which allow individuals to save up to £20,000 a year tax-free.
But we’ve rounded up the main types of conventional savings accounts below.
FIXED-RATE
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
NOTICE
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don’t lock your cash away for as long as a typical fixed bond account.
You’ll need to give advance notice to your bank – up to 180 days in some cases – before you can make a withdrawal or you’ll lose the interest.
EASY-ACCESS
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
REGULAR SAVER
These accounts pay some of the best returns as long as you pay in a set amount each month.
You’ll usually need to hold a current account with providers to access the best rates.
However, if you have a lot of money to save, these accounts often come with monthly deposit limits.
