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16 hours ago
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Britain’s savers are being urged to “act now” to take advantage of the best rates before they start falling.
With a Bank of England interest rate cut on Thursday considered a near-certainty, experts cautioned against “apathy” and said there were still competitive products available for those looking for a better deal on their savings.
Competition between providers means is it still possible to obtain easy access and fixed-rate savings accounts paying more than 4.5%.
The Bank of England base rate stood at 5.25% until late last summer, but was cut twice before the end of the year, and then again in February this year. It now stands at 4.5%.
The financial markets view a further quarter-point reduction to 4.25% on Thursday as almost certain, though in the wake of Donald Trump’s global trade war, some economists argue that a bigger half-point cut is needed. Beyond Thursday, many economists anticipate further three-quarter-point interest rate reductions in the coming months.
Rachel Springall, an expert at the financial data provider Moneyfacts, said: “The Bank of England base rate is expected to fall further this year, which will be disastrous news for savers and will make it essential for them to regularly review the rates on their savings pots.”
Apathy can lead to savers making the wrong choices, such as leaving money languishing in a current account earning no interest or only a poor return, she added.
There is now a renewed sense of urgency to take advantage of higher savings rates before they start to fall, said Anna Bowes, a personal finance expert at the financial advisory firm The Private Office.
“The fact is, there are still some really competitive rates to be had … There are still plenty of inflation-busting accounts,” she added.
However, getting the very best rate often means going with a smaller or less well known provider.
Fixed-rate savings bonds – which involve tying up your money for between six months and five years – typically offer some of the highest rates and provide a clear, guaranteed return, though some people do not have the luxury of being able to lock their cash away.
At the time of writing, the top-paying one-year fixed-rate bonds from the likes of Cynergy Bank and Tandem Bank were paying a rate of 4.55%.
However, Bowes said: “Don’t dismiss locking up some of your money for longer [if you are able to].” For those able to tie up some savings money for five years, JN Bank UK – part of the Jamaica National Group – was on Tuesday paying 4.48%.
With cost of living pressures still an issue, many savers will be keen to keep their cash close at hand in an easy access account.
According to Moneyfacts, the average easy access savings rate is 2.78%, though a base rate cut on Thursday will almost certainly see that come down. The “best-buy” accounts pay considerably more than 2.78%, though some have restrictions – for example, on the number of withdrawals a customer can make. Top-paying providers include the savings and investment apps Chip and Sidekick, which both have accounts paying 4.76%.
Springall said those savers whose money was earning a paltry rate of interest were at risk of having the value of their cash depreciate in real terms. “Their pot should instead be earning a rate that fends off the eroding impact of inflation,” she added.
While falling interest rates have presented savers with a challenge, brokers say homebuyers and those looking to remortgage are the beneficiaries of a mortgage price war, with lenders cutting the cost of their new fixed-rate deals in recent weeks.
On Tuesday, Britain’s biggest building society, Nationwide, became the latest to trim its mortgage rates again, and said that from Wednesday it would be offering some sub-4% first-time buyer fixed rates for first time since September 2024.
More cuts could follow in the coming days if, as expected, the Bank of England lowers the base rate on Thursday.
