HUNDREDS of thousands of savers with the Post Office will see the rates paid on their savings cut by as much as three quarters of a percentage point, effective from yesterday.
The National Treasury Management Agency has cut the rates in a belated reaction to the general round of interest rate cuts by many banks and building societies last month.
Many of the rates on offer are now below those available from the private banking sector.
The last time the NTMA announced cuts in Post Office accounts was on March 1st.
Almost 3.5 million accounts are held by the Post Office Savings Bank, with around one lion active at any one time.
The cut means that savers with more than £5,000 on demand will only receive 1 per cent interest, from 1.5 per cent previously.
The move will mean a saver with £10,000 on demand will be worse off by £50 a year. A total of £407 million is held in demand accounts at the moment.
Rates on the special savings accounts which hold £66 million have also been cut by between half and three quarters of a point. The highest rate payable is now 5 per cent on amounts between £40,000 and £50,000, down from 5.75 per cent.
The lowest rate is now 3.5 per cent down from 4 per cent for amounts under £5,000.
An investor with £20,000 in a special savings account will lose £100 a year as a result of the changes.
Rates on demand accounts from the banks vary from 1.25 per cent on amounts below £1,000 from Ansbacher to 1.75 per cent on amounts between 1,000 and £4,999 form Anglo Irish Bancorp to 4.5 per cent on amounts above £5,000 from Pfizer.
