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Every Thursday Founder of Savings Champion, Anna Bowes gives an insight into the savings market and how to make the most of your money…
Can you believe we are almost halfway through 2024?
Although the rate increases we’ve seen this year have slowed down compared to previous years, and we’ve even seen some declines, savers can now find hundreds of savings accounts that pay an interest rate higher than inflation.
However, the latest data from the Office for National Statistics showed that inflation was still higher than forecast – meaning the expected base rate cut is likely to be postponed again – to the second half of this year.
While it’s bad news for borrowers, it’s great news for savers.
Incredibly, the latest statistics from the Bank of England show that there is more than £253 billion in current and savings accounts that do not earn any interest.
With the maximum rates available paying 5% or even a little more, this represents potentially £12.65 billion of gross interest that is not being claimed by savers.
So now is really the time to move your money if you have money languishing, earning less than inflation, especially if you can secure some on a fixed rate, as a base rate cut will happen at some point, we just don’t know when.
Easy access
If you think you’ll need access to your money, an easy-access account is a wise choice.
The base rate cuts we were hoping for haven’t started yet, so the highest rates on offer still pay almost as much as they did at the start of the year.
Fixed-term bonds
Currently, there is a strange phenomenon with fixed-term bond rates: the longer you hold your money, the lower the interest rates on offer.
Normally, you’d expect to be rewarded for committing your money for the long term – but the base rate predictions have turned that around.
Fixed-term cash ISAs
A frequent complaint I hear from savers is that tax-free rates on ISAs are generally lower than pre-tax rates on equivalent non-ISA accounts – and this is particularly true with fixed-term accounts.
As many more savers are paying tax on their interest once again, cash ISAs are more popular than ever, as the ISA’s tax-free rate can still be considerably higher than the interest earned after deducting cash tax. the equivalent non-ISA title.