Thursday 5 March marked the 6 year anniversary of the Bank of England base rate falling to a record low 0.50%. A time when savings rates of around 3% were still achievable and continued to be so until the second blow came in the form of the Funding for Lending Scheme (FLS) in August 2012.
The savings market is a different place to what it was 6 years ago; with many long standing brands swallowed up under new names, such as Abbey, Alliance & Leicester and Bradford & Bingley, and new names introduced including Metro Bank, Shawbrook Bank and Charter Savings Bank.
There is some encouraging news however. The recent FCA Cash Market Study has recognised that there are issues within the market and hopefully some of its proposals will make steps to encourage more competition. Add to this the increasing number of challenger banks being launched, keeping what competition there is, alive. With Charter Savings Bank launching (see our rates rundown) and more providers due in the coming months, we hope these additions will have a positive impact.
All eyes look to when the Bank of England will increase the base rate, however the continued disconnect between base rate and savings rates means there is little reason to believe that even when rates do rise, that all savers will reap the full benefits.
It has never been more important for savers to manage their cash. As the FCA Cash Market Study revealed, there is at least £160 billion sitting in easy access accounts paying 0.50% or less and a further £12 billion in cash ISAs. So savers need to use all the weapons in their armoury in order to earn the best interest rates available. From high interest paying current accounts paying up to 5%, to a mix of longer term fixed rates and the best easy access accounts, in order to have at least some cash earning the highest rates now, while retaining some funds in accessible accounts, should rates rise in the near future.
That means remaining ever vigilant and not allowing inertia to reward the banks and building societies which cut the interest rates they are paying.
As the FCA study suggested, savers need to be kept better informed of the rates they are earning and just how much more interest they could enjoy. Our free Rate Tracker service already provides this information. It’s a tool that ALL savers should use; they have nothing to lose, but more interest to gain.
Savingschampion.co.uk’s unbiased Best Buy tables and free Rate Alerts offer savers the ability to keep up to date with the best rates in the market. Our free Rate Tracker service will alert you whenever the rate changes on your accounts and when it’s time to switch. For a small fee our Concierge Service builds a bespoke savings portfolio, fills out all the paperwork and monitors your accounts with your own personal savings adviser.