SPARK YOUR INTEREST
Martin Lewis says it’s a ‘crucial moment to act’ NOW to boost your savings ahead of key decision tomorrow
Martin urged Brits to check what interest they currently get
MARTIN Lewis has urged savers to act now to boost their savings ahead of a key decision tomorrow.
He spoke during Tuesday's episode of his ITV programme, The Martin Lewis Money Show Live.
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Martin urged Brits to check what interest they currently get ahead of an expected fall in the UK base rate this week.
He said: "UK base rates are expected to be cut on Thursday, meaning interest available to savers will continue to decrease
"So savers, this is a crucial moment to act. Check now what rate you're earning.
"If it's less than 5%-ish, we need to sort it."
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The Bank of England (BoE) base rate is used by high street banks and building societies to set the interest rates it offer on lending and savings.
The BoE meets every six weeks and makes a decision on whether rates should go up, down or stay the same.
It makes these adjustments in response to the rate of inflation and the outlook of the economy.
It has a target of getting inflation at 2%.
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Rates have risen over the past two years to get the inflation rate down from record highs of over 10%.
Inflation measure the price of good and services now compared to last year, on everything from a pint to a pack of butter to train tickets and haircuts.
The recent reduction of the BoE base rate from 5.25% to 5% comes off the back of inflation falling back around 2%, and further rate cuts are set to follow.
It means many savings rates are currently higher than inflation - which is good news for savers.
But as rates are on a downward trajectory, locking in the high savings available is crucial.
Martin then went on to share the best rates you can get right now on easy access accounts.
Easy access is just one of several different types of savings account.
It does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns than others where you lock in for set period, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
The top paying rate is currently 5.17% on a cash ISA from Trading 212 or Moneybox.
ISAs, or individual savings accounts, allow individuals to save up to £20,000 a year tax-free.
The best paying non-ISA, easy access account, is Chip's 5%, though you can only make three withdrawals a year without a penalty.
The best rate that's penalty-free is Vanquis Bank's 4.85%.
Santander is currently paying up to 6% on its regular saver account tied to its Edge current account, but you can only save up to £4,000 a year.
Types of saving account
Note that each account also has different terms, like the minimum and maximum deposits, so always check the accounts suits all your needs.
Other types of account could also be more suitable, depending on the access you need to cash.
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
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These accounts don't lock your cash away for as long as a typical fixed bond account.
You'll need to give advance notice to your bank - up to 180 days in some cases - before you can make a withdrawal or you'll lose the interest.
FINDING THE BEST SAVINGS RATES
WITH your current savings rates in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
Research price comparison websites such as MoneyFactsCompare.co.uk and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you'll want to consider any account that currently pays more interest than the current level of inflation - 2%.
It's always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you're saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.
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