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Top rates still above 5% for savers as Bank of England makes no change

The Bank of England decided to hold the base rate despite inflation falling to 3.4%

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The Bank of England initially increased the rate to 5.25% in August 2024, after 14 consecutive rises

There was good news for savers today, as the Bank of England decided to keep the base rate at 5.25% for the fifth consecutive time. 

This is the highest rate we’ve seen since 2008, and there are many predictions swirling in the financial markets about when the base rate will finally be reduced.

Some say it could be as soon as May, while others are more conservative and think a summer drop is more likely. 

If it does hold out until the summer, it will mark nearly a year of the base rate at 5.25%. The Bank of England initially increased the rate to 5.25% in August 2024, after 14 consecutive rises. 

This is sobering news for borrowing, as homeowners are still faced with high mortgage rates, so they would be hoping for a base rate drop as soon as possible. 

However, for savers, this base rate decision gives even more time to maximise their savings. 

Interest rates on top savings accounts remain above 5%, although there are only a few accounts offering the same rate as the base rate or above. This shouldn’t deter savers from moving their money, as there are plenty of accounts that are beating the inflation rate - which gives their money more purchasing power. 

The current inflation rate is now 3.4% and the monthly average interest rate for all savings accounts is 4.1%, so keep this in mind when searching for the best deals. 

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.

The Financial Conduct Authority is also encouraging savers to move their money if it is sitting in an account earning little interest. It has launched a campaign encouraging savers to take advantage of these high interest rates before it’s too late. 

Hargreaves Lansdown has also released research that found almost half of people had no plans ever to switch. This is surprising as it means that many people could be missing out on earning some extra cash. 

Oxbury currently has a one-year fixed-rate bond at 5.26% and this can be opened with £1,000. If someone did have this amount of money sitting in a low-interest account they could be missing out on roughly £50 after one year of saving. This might sound like a small amount, but it’s better than nothing and it can help to grow your savings pot. 

Plus, it’s easy to switch and open a savings account as many providers allow applications online. 

Elsewhere, easy access accounts are also offering rates above 5%. Cynergy Bank has an easy access account at 5.10% and this can be opened online and with as little as £1. Some easy access accounts come with restrictions but this one has unlimited free withdrawals so it’s flexible and it has competitive interest. 

There’s also still time to make the most of the £20,000 ISA allowance, as this runs out on April 5. ISAs allow you to save tax-free and Moneybox has an easy access cash ISA at 5.11%, which can be opened with £500. Plus, Castle Trust Bank, OakNorth Bank, Kent Reliance and Aldermore all have one-year fixed-rate cash ISAs above 5%. 

Fixed-rate accounts don’t allow access to the money until the end of the term, but it does mean that this rate is guaranteed for one year. This works well for savers that want to make the most of the top rates now, as we don’t know how long they will last…

Help stretch your budget a little further by making the most of your savings.

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.