Savers will see the force of further Bank of England base rate cuts on their hard-earned cash, comparison site Moneyfactscompare has warned.
According to its analysis, average rates across easy access and notice accounts have fallen since the start of August 2024 after providers made cuts in the aftermath of the Bank of England base rate cut of 0.25%.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Savers are the ones who feel the force of cuts to interest rates, and to add insult to injury, will see no rise to any personal tax or savings allowances in the short-term, making Cash ISAs increasingly attractive.
“Those savers who use their interest to supplement their income will feel overlooked if rates plummet.”
She explained: “In December 2021, the average easy access rate stood at a pitiful 0.20% and it took months for this to rise above a measly 1% (November 2022 – 1.16%).
“However, the Bank of England base rate had risen from 0.10% to 2.25% over that time. Safe to say, it’s understandable that savers feel hard done by, barely seeing a return on their money and in fact, watching the true value of their cash eroded by unprecedented high inflation.
“This could, in turn, create an almost apathetic attitude among savers today, even as the average easy access account pays around 3%, the bank base rate is higher. Shockingly, there are UK current or savings accounts out there earning no interest whatsoever, £252billion worth in fact, according to the Bank of England.”
Loyalty is also questionable when it comes to savings rates, Ms Springall noted.
She explained: “Some consumers may well get a promotional product as a new customer for a limited time, others who keep their cash stashed for convenience with the high street banks will be getting pitiful returns.
“The average easy access rate paid across the biggest high street banks is 1.91%, which is far less than the current market average easy access rate across all savings providers.
“However, it is not all doom and gloom as savers can easily switch their flexible pots elsewhere. Challenger banks are offering attractive returns and it would be unwise to overlook them when they have the same protections in place as a high street bank.
“Savers need to proactively keep on top of the best rates and review their pots regularly to see if they are getting a raw deal.”
