Savers have been warned that “time is running out” as high street banks and building societies prepare to cut interest rates attached to accounts.
Savings interest rates have reached historic highs in recent years following the Bank of England’s decision to raise the base rate in it fight against inflation.
Earlier this month, the central bank’s Monetary Policy Committee (MPC) voted narrowly to slash the rate from a 16-year high from 5.25 per cent to five perc cent.
While this is a boon for borrowers, savings interest rates are likely to come down in the months ahead as banks react to the Bank of England’s actions.
Despite this, rates on savings accounts still substantially beat the current rate of inflation.
Yesterday, figures from the Office for National Statistics (ONS) found that the consumer price index rose slightly to 2.2 per cent for the 12 months to July 2024.
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Savings rates continue to be competitive GETTY According to Hargreaves Lansdown’s Christian Peasgood, bank customer should “take advantage” of high interest rates before its too late.
He explained: “Rates won’t likely increase further and banks aren’t likely to wait around to cut their rates, so fixing now could get you the best deal.
“Fixed term products pay a fixed rate which means you’ll benefit from the same rate for the duration of the fixed term while the rest of the savings market falls closer to inflation. Although nothing is guaranteed.
The investment expert shared advice for those looking to grab a fixed rate savings account before cuts are introduced.
Peaasgood added: “Remember, fixed rate products don’t usually let you withdraw your savings before the term ends. So before you fix, think about when you need access to your savings and make sure you have enough cash set aside in easy access savings for your emergency fund.
“If you’re working, we suggest three to six months’ worth of essential spending – if you’re retired, it’s one to three years.”
Based on the latest data from Moneyfactscompare, savings rate are coming down by the day.
For the average one-year fixed savings rate today is 4.53 per cent which is down from 4.54 per cent the previous working day.
Over the period, average easy access savings rate today is 3.11 per cent, unchanged from the day before.
The interest rate attached to one-year fixed cash ISA has fallen from 4.41 per cent to 4.39 per cent.
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Earlier this month, the Bank of England voted to cut interest ratesGETTY
In comparison, the average easy access ISA rate remains at 3.33 per cent.
Analysts are pricing in further rate cuts from the Bank of England later this year.
The central bank’s MPC will next meet to discuss the base rate on September 19, 2024.