Goldman Sachs cuts rate on Marcus savings account for new savers

The interest rate on the previously market-leading easy-access savings account has fallen to 1.35%.

Goldman Sachs is cutting the interest rate on its Marcus account from 1.45% to 1.35% for new savers.

This is the second cut in the space of three months and leaves the former market-leading account well down the best buy table.

Marcus was launched to much fanfare in September 2018 at a rate of 1.50%, making it the top-rated account. This included a bonus of 0.15%, which was payable after the first year.

A year later, the headline rate was reduced to 1.45% with a bonus of 0.10% after the first year. The new rate does not include a bonus.

The news comes after a report in The Telegraph that Goldman Sachs is looking to slow the growth of its Marcus brand in the UK to avoid stricter regulations. 

The paper says this is to stop the volume of deposits exceeding £25 billion, the point at which banks have to separate their retail operations from their investment banking arms.

Goldman Sachs has also cut the rate on its Saga easy-access savings account from 1.40% to 1.35%. This includes a 0.20% bonus for the first 12 months.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, says: “It was always going to happen eventually.

“The rate was significantly higher than its nearest competitor when it launched, attracting cash from 100,000 savers in its first month, and has been among a handful of market-leading accounts ever since.

“Marcus has achieved its aims of making a name for itself in the UK market and attracting significant cash, so it’s pulling back on the rate.”

Alternative options

This year has been tough for savers, with lenders cutting rates across the board.

For existing savers, the rate will remain the same at 1.45% for 12 months from when they opened their account. So, if you have already have an account, you may want to hang on to it.

However, if you are a new saver, there are higher-paying interest rates available.

The new market-leading account is via Shawbrook Bank with its Easy Access – Issue 17 account, which pays 1.41%. Further additions and withdrawals are allowed.

You can open the account online with a minimum of £1,000. It can also be managed by phone.

Its nearest rival is Chelsea Building Society’s One Year Limited Access Saver at 1.40%, which can be opened online with £100. However, you are allowed only one withdrawal a year.

Post Office Money has an account at 1.38%, which can be opened with a £1 deposit online. It comes with a bonus of 0.88% for 12 months.

If you are looking for a higher-paying account and don’t mind locking your money away, you can always try a fixed deal.

The current highest paying one-year fixed deal is from Gatehouse Bank at 1.70%. Note, this account’s rate is an expected profit rate (EPR).

If you don’t mind tying your money up for longer, Gatehouse Bank also has a two-year fixed deal at 1.90%, and a three-year bond at 2%.

Andrew Hagger, personal finance expert at Moneycomms, says it is “another blow for UK savers”.

He adds: “When a market leader cuts rates it leads to a ripple effect, which allows other providers to trim rates and still feature in the best buys.

“It’s a grim situation for savers, but with some accounts paying less than 0.2%, make sure your money isn’t stagnating in one of these below par accounts.”

This article was first written by our sister magazine Moneywise.

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