Interest rates rise: what it means for you

Although the interest rate rise should be good news for savers, bear in mind that banks are rarely quick to pass any increase onto customers, and savings rates may not go up by the same amount as the increase.

According to research by financial website Moneyfacts.co.uk, since the start of 2022, several accounts which were market-leading have been withdrawn. There have been some deals returning since their removal earlier this month, but savers may need to act quickly to take advantage.

Rachel Springall, finance expert at Moneyfacts.co.uk: “If we do see market-leader savings rates surface, keeping a close eye on the top rate tables and signing up to rate alerts is essential to keep in tune with market volatility and to avoid the disappointment of missing out on an attractive rate. It is expected that we will see even more base rate rises in 2022, and if providers fail to pass this on, savers would be wise to reconsider their loyalty and switch.”

The highest rates are typically found on fixed rate savings accounts, which require you to tie up your savings for a set period of time. If you’re considering this type of account, you must be certain you won’t need to dip into your savings during the fixed rate term, or you’ll normally face a penalty. You can find the current best buy fixed savings rates in our guide Fixed rate savings bonds explained.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown said: “You may be tempted to hold on for a better rate instead of fixing. But you have to decide what you’re waiting for, and when you’ll stop waiting and fix. Will it be enough for you if the Bank of England raises traits to 1% or will you be tempted to hold out in the hope of 1.25% at the end of the year? If so, how much interest will you have missed out in the interim?”

Author: wpadmin

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