Your bank may want to make changes to your account, such as to the interest rate or overdraft limit. Find out how much notice your bank must give you and your rights if the terms on your account are set to change.
What are the different types of account?
The type of bank account you have can affect what banks have to tell you about interest rates.
There are accounts used for regularly making and receiving payments, such as current accounts, card-based accounts and some instant-access savings accounts. There are also other accounts for savings, such as those with a notice period and cash ISAs.
Check with your bank if you are not sure what type of account you have.
Will my bank tell me if it drops the rate of interest on my account?
If your bank wants to reduce the rate of interest it pays you on credit balances on a current account, a card-based account or (in some cases) an instant-access savings account, it generally has to tell you two months before it does.
The exception to this rule is if the interest rate on your account is linked to an official rate – such as the Bank of England base rate – and it moves automatically in line with any change in that rate. This is sometimes known as a ‘tracker rate’.
For other savings accounts, such as those with a notice period or cash ISAs, a bank should give you reasonable notice that it proposes to make a material reduction to the interest rate.
Did you know?
The banks have agreed to display the interest rate on your account on the statements they send you.
A reduction is ‘material’ if the balance of your account is £500 or more and the interest rate falls by more than 0.25% at one time or by 0.5% or more over the previous 12 months.
This should give you enough time to move your money to another account, without penalty, if you are not happy with the reduced rate.
If your bank is to raise the interest rate it pays you on your account, it can make the change immediately.
Find out more about how to use this guide.
Did you know?
If your account or cash ISA has a bonus interest rate for six months or more, and it has a balance of at least £500, the bank should send you a reminder in good time before the introductory period ends.
What if my bank reduces the overdraft on my account?
Overdrafts are regulated under the Consumer Credit Act 1974, which is enforced by the Office of Fair Trading and local authority trading standards services.
You can get more information about this from Consumer Direct
Know your rights!
If the interest rate on your account is reduced without warning you can make a complaint to your bank. If you are not satisfied with its response you have the right to complain to the Financial Ombudsman Service.
Find out more about how to use this guide.
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