Savers looking to maximise the interest on their funds would be wise to lock in a rate now, experts have warned.
Savings rates have decreased in recent months as markets predict the Bank of England will cut interest rates this year.
Four months ago, the average one year fixed savings account gave you 5.44 per cent on your money. Today, that rate has decreased to 4.87 percent – and is expected to fall further.
“I am expecting rates to keep coming down week by week going forward. It means that if you got money to put away, you should do it now,” said Andrew Hagger, personal finance expert and founder of Moneycomms.
Returns have increased sharply over the last two years as savings account providers have responded to 14 consecutive rises in the Bank of England’s base rate.
However, while fixed rates have been historically high, inflation reaching a 40-year high ate away at savers cash.
Inflation has now come down and is expected to continue decreasing, leading to an expected drop to interest rates this year.
Currently, the best rate on a one-year fixed rate is now 5.39 per cent from Al Rayan Bank.
The best two-year deal is 5.15 per cent from Union Bank, while the best four and four-year and more deals pay 4.55 per cent.
The rates on early-access accounts, which allows savers to take out their money freely instead of locking away for a fixed period of time, are still hovering around the same level as four months ago, according to Moneyfacts, with the average early access rate standing at 3.16 percent.
However, they could soon fall if the Bank decides to cut interest rates from their current level of 5.25 per cent.
If you are looking to lock money away, there is no reason to wait, Anna Bowes of Savings Champion, said.
“It is a better time for savers now than last year. Savers are beating inflation if they lock in now meaning you’d want to lock your money in as soon as possible.”
She said that people should not forget about longer-term deals, either.
“If you do have enough pounds in your pocket to lock them in, it might also be worth thinking about locking them in for longer.”
Some savers, Bowes said, might be waiting for a spike in competition from high street banks, though that could be a risky strategy if the Bank chose to cut rates faster.
Best buys
Best one year fix
Al Rayan Bank – 5.50%
Investec Bank – 5.30%
SmartSave – 5.27%
StreamBank – 5.20%
Secure Trust Bank – 5.20%
Best two year fix
Union Bank of India (UK) Ltd – 5.15%
iFAST Global Bank – 5.10%
AIB – 5.10%
Allied Irish Bank (GB) – 5.10%
Investec Bank – 5.05%
Al Rayan Bank – 5.05%
Best three year fix
Post Office Money – 5.00%
Al Rayan Bank – 4.95%
Castle Trust Bank – 4.80%
Zenith Bank (UK) Ltd – 4.70%
United Trust Bank – 4.70%
Best easy access
cahoot – 5.20%
Ulster Bank – 5.20%
Earl Shilton Building Society – 5.15%
cahoot – 5.12%
Leeds Building Society – 5.10%
