Premium Xtra rate is trimmed again

INTEREST rates on the Halifax's five-month-old Premium Xtra account have been cut for the second time since its launch, writes Maria Scott.

From 1 April, they were reduced by 0.25 of a percentage point on all tiers. Sums between pounds 10,000 and pounds 24,999 now earn 6.55 per cent gross (4.91 per cent net); pounds 100,000 and over earns 7.35 per cent (5.51 per cent net). These rates include an anniversary bonus of 0.25 per cent (0.19 per cent net) payable if there are no withdrawals during the year.

Other Halifax rates were cut in February after January's base rate cut. John Walsh, Halifax's assistant general manager, said Premium Xtra rates had not been cut immediately after last November's base rate cut and that they would not be trimmed again unless there is another cut.

Premium Xtra ran into controversy soon after launch. Halifax said that customers in its 90-day notice account could transfer funds into Premium Xtra without notice. But this account had interest credited on 1 February so those who took advantage of the no-notice concession missed out on interest capitalisation for nearly a year. After complaints, Halifax said that savers who switched and were unhappy at the terms could have their position reversed. The 90-day account interest would then be capitalised. If investors still want to go into Premium Xtra they can instantly transfer anything above pounds 5,000.