Consumer champion Martin Lewis has issued an urgent warning to savers, advising them to lock in fixed-rate savings accounts “today” following the Bank of England’s recent base rate cut from 4.5 per cent to 4.2 per cent.
The money saving expert cautioned that savings providers are typically quick to reduce their interest rates after such cuts, meaning current rates are unlikely to improve.
Speaking on his Money Podcast, Lewis told listeners: “We’re going to see easy access rates, both the ones being offered and your existing accounts, coming down.”
He emphasised that those considering fixed-rate accounts should act immediately to secure the best possible returns before rates drop further.
Martin Lewis has a warning for savers
GETTY / PA
Lewis explained that fixed-rate savings accounts typically factor in future interest rate changes, making them already lower than easy access rates. However, he stressed the urgency of acting now.
“If you’re looking to fix, I would be fixing today,” Lewis advised. He detailed how savings providers operate fixed-rate accounts in tranches, offering a set amount of savings at a specific rate before reassessing.
“They’ll offer £5million worth of savings at 4.6 per cent. Once it reaches £5million, it will look to re-establish what its new fixed rate will be,” he explained.
“So, you may be able to get in now before the rate drops and they reassess based on the new information.”
Do you have a money story you’d like to share? Get in touch by emailing [email protected].
Interest rates on savings have been rising in the last couple of years amid multiple rate hikesGETTYFixed-rate savings accounts enable savers to lock in the interest rate offered at the point of opening for a specified period, typically between one to five years.”And of course, because it’s a fix, your rate is locked in,” Lewis noted.
For those who do not need immediate access to their money, fixed-rate accounts offer security against market fluctuations and potentially declining returns.
Lewis warned that financial analysts are predicting significant interest rate reductions over the coming year.
“The safest bet is to [fix] today. And also as a general point, analysts are predicting that interest rates are going to come down quite substantially over the next year,” he said.
For risk-averse savers concerned about rates dropping further, Lewis recommended locking money away in the highest rate fix available now.
“I can’t promise anything, we live in such an uncertain world, but the risk-averse thing now is if you’ve got savings and you want to keep a higher rate, would be to lock them in on a fix.”
LATEST DEVELOPMENTS:
Full list of base rate changes from the Bank of England over the last two years CHAT GPT Lewis’s advice comes amid concerning data about the financial resilience of UK consumers. Alexandra Loydon, Director of Advice at St. James’s Place, highlighted the worrying situation.
“The FCA’s data paints a worrying picture of the financial resilience of UK consumers. The percentage of people with no cash savings is alarming, and many do not have financial reserves to draw upon in an emergency,” she said.
Loydon added that St. James’s Place’s own research revealed similar concerns, with “6 in 10 UK adults stating they do not feel financially comfortable, and more than a quarter of the nation feeling anxious about the year ahead.”
