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Savers still have time to get inflation-beating interest rates but they won’t last forever

It’s good news for savers as the base rate remains at 5.25% for another month

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The market is always changing, so it’s important to keep a close eye on interest rates.

The Bank of England’s monetary policy committee met again today to discuss the base rate. They voted in favour of keeping rates at 5.25%, which means the base rate hasn’t changed since August 2023. 

We expected the base rate to remain at this level, as although inflation had slowed to 2% in May, there were still areas of concern for the Bank of England. For example, the CPI (Consumer Price Index) services inflation rate eased to only 5.7% in May and it was expected to drop further to 5.5%. This type of inflation covers the likes of education, hospitality and culture.

The Bank of England has also clearly stated that it would not make a rushed decision, as they want to be confident inflation will stay low. 

This means the earliest we could see a base rate decrease is in August, but some experts say September could be more likely. 

In the meantime, savers should take advantage of the base rate and move their money to high interest savings accounts

The top deals are currently above 5%, which is more than double inflation and this gives your money more purchasing power. But, with inflation now at 2%, this could mean providers start dropping their rates even though the base rate remains frozen. 

The market is always changing, so it’s important to keep a close eye on interest rates. 

Average savings rate vs base rate over time

An illustration of how savings rates have changed in relation to the Bank of England base rate over the two past years. The average rates have been calculated by taking the rates from the whole of market at the time of the base rate change. Source: Defaqto and Bank of England data.

We recently conducted a survey* on consumers’ savings habits and found almost half of the people surveyed hadn’t taken action since changes in the Bank of England’s base rate. 

This means savers could be missing out on extra cash, especially if their money is sitting in a savings account below 4%. 

The survey also highlighted that only 20% had moved savings to a higher interest account following the base rate changes. This is a missed opportunity, as to get the best deals it’s important to keep track of this decision. Many providers change their rates as a reflection of the base rate. 

Plus, if rates on savings accounts are stronger than inflation, then it’s worth trying to save more money each month to maximise the interest earned. But, we found only one in seven people had increased the amount they save in reaction to the base rate. When asked what were the main challenges for saving money, 37% said a lack of disposable income and 32% said unexpected expenses.This highlights how the cost-of-living crisis is still impacting many people, despite inflation falling.

Currently, Chase is offering an easy access savings account at 5.1% which includes a fixed boosted rate of 1% until January 16, 2025. This does not have a minimum opening balance but savers will need to open a Chase current account to access it.  Elsewhere, Oxbury has an easy access account at 5.02% but you’ll need £20,000 as a minimum opening balance. 

For fixed-term savings, Vanquis has a one-year fixed-rate bond at 5.21% and this has a minimum opening balance of £1,000. Remember, with fixed-rate accounts this is guaranteed interest, but the money can’t be accessed until the end of the term. 

If you would like a bit more flexibility, but still a high interest rate, Vanquis has a 90-day notice savings account at a huge 5.35%. You’ll just need to give 90 days notice before accessing the money. 

So, with plenty of inflation-beating deals still available for savings accounts, now is the time to act - before it’s too late. 

*Survey conducted by Censuswide on behalf of money.co.uk - 2,003 respondents from the UK aged 18 and over. This survey was conducted in June 2024.

Maximise the value of your savings by hunting down the best rates available

About Lucinda O'Brien

As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.

View Lucinda O'Brien's full biography here or visit the money.co.uk press centre for our latest news.