Savers are likely to pay the price of the the Bank of England’s decision to cut the base interest rate to just 2%.
As the base rate hits its lowest level since 1951, savers are seeing the return on their money plummeting.
Savers with their money invested in a notice account are being hit doubly hard – not only are many receiving a shockingly low rate of interest, they’ll also be penalised if they try to withdraw their cash before the notice period is up, making switching in the short-term potentially costly.
Even before today’s 1% cut in the base rate, Natwest was paying customers with under £2,000 in its 30 Day Bonus Reserve savings account a paltry 0.1%.
Nationwide is offering just 0.8% interest on balances under £10,000 in its 90-day notice CapitalBuilder account.
There are still good deals to be found, but consumers need to move quickly before these too disappear from the market.
If you can afford to tie up your cash for a year or more, it’s worth considering a fixed-rate account. You can find all the best savings accounts by checking Which? Best Buy savings recommendations. For example, Best Buy Tesco Personal Finance is still advertising a market-leading rate of 6% on its internet saver account.
And there is another option: If you have savings but also owe money elsewhere (for example on a credit card or personal loan), the low interest rate you may now be receiving on your savings account means it could be worth paying off expensive debt instead.
As credit card interest rates have failed to fall in line with the Bank of England base rate, you could be paying far too much for debt you could pay off today.
The key for consumers is to shop around, compare deals and strike while the iron’s hot. Don’t just accept the savings deal offered by your main high street bank.