With most savings accounts, the interest rate you receive could go up now that the Bank of England has increased its base interest rate to 0.25%. We say ‘could’ because there’s absolutely no guarantee that it will. Even if your bank or building society does increase interest rates, they won’t necessarily go up by as much as the Bank of England has raised rates by. It’s also worth noting that with inflation currently at 5.1%, unfortunately there are no savings accounts offering returns that are anywhere close to keeping up with soaring living costs.
If you have money in a fixed rate savings account, the interest rate will stay the same until the end of the term.
Rachel Winter, associate investment director at Killik & Co said: “Interest rates remain at relatively low levels. Savers should therefore continue to look for alternative ways to earn returns on their savings. With inflation so high, stashing cash or keeping it idle in banks should be avoided. Those looking to make their money work harder may want to consider investing as the stock market has historically delivered above-inflation returns over long-term periods.”
Find out more about whether investing some of your savings could be right for you in our guide Investing – the basics.