Find out what a bank or building society must do if it wants to make changes to your account and interest rate.
Firms must always pay attention to what you need to know as a customer, must keep you informed, and must always treat you fairly when making changes to your account.
This applies to all changes, such as the service offered and your terms and conditions.
However, specific rules apply if banks reduce the interest rate paid on your account.
Reducing the interest rate
Your bank can only change the interest rate of your account if your terms and conditions have a fair clause that allows them to do so.
If your bank plans to reduce your interest rate it should tell you in advance. The type of notice your bank must give you depends on a number of things, including the type of account you have.
Your bank does not have to notify you if the interest rate on your account is linked to an official rate – such as the Bank of England base rate. This is sometimes known as a 'tracker rate' and it will automatically move when the base rate does.
In other cases, you can usually expect your bank to give you reasonable notice of changes. This gives you the opportunity to move your money to another account if you are not happy with the reduction.
If you have the type of account that you can make payments from, your bank has to give you 2 months’ notice if it wants to reduce the rate of interest it pays.
For accounts that you cannot make payments from, your bank must give you reasonable notice for it to make changes. If your bank gives you this notice more than 2 weeks before the change, we expect the bank to send you a reminder.
Your bank must also give you notice if an introductory, promotional, or preferential rate of interest that applies to your account is due to end.
If the interest rate on your account is reduced without warning you can complain to your bank. Find out more about how to complain.
Raising the interest rate
If your bank wants to increase the interest rate it pays on your account, it can make the change immediately and does not have to tell you.