Paragon reducing interest rate

It will be reduced from 1.15% to 0.8% on 23rd May, the next best one is 0.93% with Investec so will be moving across.

I do want to add the communication is very clear from Monzo but it would be helpful to also have something in the app

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I was just in the process of creating the same topic :grin:

On 23 May 2020, Paragon (the bank that provides your Savings Pot) will be reducing the interest rate on your Easy Access Savings Pot to 0.80% AER/Gross.

You’ll find your current interest rate if you go to the Home Tab in the app and swipe across to your Savings Pot.

AER stands for Annual Equivalent Rate and tells you what the interest rate would be if interest was paid and compounded once each year. Gross is the interest rate before tax is deducted.

Paragon Bank is making this change because the Bank of England reduced their base rate and that affects the interest rate they’re able to offer you.

They have the right to change the interest rate at any time for their own reasons, but we’ll always let you know at least 30 days before the change. You can read all of your terms by swiping across to your Savings Pot and scrolling down to “Your savings agreement” and “Summary of terms”.

You don’t need to do anything.

We’ll adjust the interest rate of your Paragon Easy Access Savings Pot automatically. As of 23 May, your Savings Pot will start earning interest at the new rate of 0.80% AER/Gross.

But you can if you want to.

To find out more information about the other Savings Pots we offer take a look at our website . If you choose to, you can close your Savings Pot in your Monzo app or by getting in touch with us.

The Monzo Team

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Have investec reduced their rates yet though?

I don’t know, personally, as I only have Paragon, Shawbrook, and Charter, interest pots.

If Investec are available currently in-app, then that may offer some guidance as to where their path lies.

Monzo website still shows 0.93% for Investec, and the new Paragon rate of 0.80%.

OakNorth are offering a spit-worthy 0.10% on deposits, with withdrawals next working day. Sounds attractive :rofl:

I was just looking at this… so i have an existing pot with Charter, but seems i was forced to open all new pots with them?

Why can i not select to chose Charter now? Saying as i already have my “account” with them and agreed to the terms surely i should be allowed to open another pot with them :thinking:

I’ll switch to Investec if it stays at 0.93%, but Marcus are still offering 1.2%.

A 0.3%ish difference is just about small enough to make me keep it with Monzo…

Times like these I wish there was a simple way to change the pot type/provider from within the pot.

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It’s funny how so many companies are jumping on the bandwagon to reduce all of their interest rates even though the amount they’re earning themselves is likely not so drastically reduced.

The be fair to banks it’s not quite as simple as people might think.

Banks normally use interest on savings accounts to attract deposits, as they are only allowed to lend out at a certain ratio of deposits to loans. When Bank of England base rates are very low, they can only afford to offer interest rates which are also very low (as they can only afford to pay slightly more than base rate, not massively more). This because they make money on the “spread” (difference) of interest rates they charge for loans and interest rates they pay on deposits. Loans are currently at lower rates as well, so the reduction cuts both ways - although it may be bad news for savers, it is good for borrowers.

Also, when the base rate is low then there are other sources of funding which are, relatively speaking, more attractive sources than savings deposits. This means that, at the same time, the incentive for banks to attract customers for savings accounts is reduced.