Subscribe to The Money StopNews Feed

Browse > Home / Banking, Featured / Savers should act quickly to secure good interest rate on savings

Savers should act quickly to secure good interest rate on savings

October 12, 2008 by admin  
Filed under Banking, Featured

Leave a Comment

According to many industry officials savers in the UK need to take action as soon as possible in order to secure a good rate of interest on their savings, as – whilst on many is high at present – many lenders may start cutting savings interest rates as a result of anticipated cuts in the Bank of England base rate.

Over the past couple of years the interest rate hikes have spelt bad news for borrowers but have enabled many savers to get a better return on their savings. Although the base rate has fallen three times between December of last year and April of this year many financial institutions have continued to offer good rates on interest on savings. The reason for this is simple – it is far easier for many to raise funds from savings deposits than from the wholesale money market, and therefore they are doing all that they can to try and encourage savers to deposit their cash.

Since the onset of the global credit crunch financial institutions have been finding it increasingly difficult and expensive to secure funds on the wholesale money markets, and the next step for many has been to try and increase savings deposit levels. It seems that the plan has worked as a number of banks and building societies have reported a huge increased in savings deposits over recent months, fuelled by savers wishing to get a better return on their savings and by consumers being more prudent in the current financial climate by putting some money aside.

However, officials are now warning that the days of high interest rates on savings could be drawing to an end, as the Bank of England is widely expected to cut interest rates later this year as a result of imminent recession, which the nation is expected to slide into by the end of the year. A number of officials claim that the base rate will be cut in November, and that those wanting to continue getting a good return on their savings need to act now and find a high fixed rate savings account so that they do not suffer if and when the base rate falls.

The report also shows that a number of financial institutions have already cut the interest rate that they offer on savings account in anticipation of forthcoming Bank of England cuts. Some have predicted that the base rate could fall as low as 3.5% next year, which would see the interest rates on savings accounts plummet.

One industry official said: ‘In our view, interest rates will come down pretty sharply. The longer they remain high, the further they have to fall.’

Another official stated: ‘The Bank of England will want to see inflation peak first. We think the August inflation figure could be a shocker – maybe 5%-plus, due to the energy price rises. But then rates should fall and could be down to 4% by summer next year.’

With these predictions in mind savers need to take action to protect their savings accounts from rate falls by finding a suitable fixed rate savings account in order to get better returns on their investment in the event of further rate cuts.

Tags: interest rates, number, suitable fixed rate, saving, rate falls

Tags:

Related Entries

  • Over 50s could enjoy great deal on their savings
    • Over recent weeks a number of high interest savings accounts have come to light, with many experts urging apathetic consumers to make the effort and switch from a lower interest account to one of the
  • Good news for savers with Sainsbury’s
    • Those with Internet savings accounts with Sainsbury's are in for some good news, as the supermarket giant and bank has now raised the interest rate on its Internet savings account to 6%, a rise of
  • Further controversy over banks’ failure to apply interest rate rise to savers
    • Once again many banks in the UK are coming under fire as a result of leaving savers hanging on to find out if and how they will benefit from the latest interest rate rise, which
  • Savers not taking full advantage of Isas
    • Up to one in three savers are not taking advantage of their tax-free allowance with their individual savings accounts, according to new research. Findings from Marks and Spencers Money shows that by not saving the
  • Consumers still failing to get best rates on their savings
    • According to a recent study many consumers in the UK are still failing to make the most of their savings by finding an account that pays a competitive interest rate. The news comes despite the
  • Three billion barrier smashed by Icesave
    • In a recent announcement Icesave, which only launched in October 2006, has revealed that since its launch it has taken over three billion pounds in deposits and has opened over eighty thousand savings accounts. Part
  • Customers could be losing out on savings accounts
    • Many consumers in the UK like to save some money towards a rainy day, to build a nest egg, or simply for emergencies, but recent data has revealed that an alarming number of savers in
  • Savers group hoping for support
    • A savers group that was set up by a retired Surrey entrepreneur is looking for support in the hope of accumulating one million signatures so that it can petition Downing Street. The group is called

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!