Savers urged to lock in best deals before UK interest rate decision

Experts are split on whether there will be a UK interest rate cut on Thursday but most agree on one thing: savers should “act now” to lock into the best rates while they are still available.

All eyes will be on the Bank of England’s monetary policy committee when it meets on 1 August, although while some believe we could see it announce the first base rate cut in more than four years, others reckon we will have to wait until at least September.

“Savers would do well to follow the guidance of advisers and savings professionals and take advantage of the competitive rates available,” says Simon Merchant at the cash savings platform Flagstone. Whether it is instant access accounts or five-year fixed-rate savings bonds, there are plenty of inflation-beating deals out there, he says, adding: “Savers should act now.”

Related: The experts: financial advisers on 18 foolproof ways to spend less and save more

The Moneyfactscompare.co.uk website is a good place to check best-buy rates for different accounts.

Rachel Springall at the site says those people with some disposable income who have not done so already “would be wise to grab a top-rate savings account to keep it safe and earn some decent interest”.

Be aware that best-buy accounts can have their rate cut or be quickly withdrawn if providers are hit with an influx of deposits.

On Thursday, the average one-year fixed-rate savings bond on sale was paying 4.64%. With these accounts, savers’ return is guaranteed. The top-paying ones are now offering rates above 5%: at the time of writing, there were table-topping one-year fixed-rate bonds on offer from providers such as Union Bank of India (UK) Ltd and MBNA paying 5.4% and 5.15% respectively (in both cases the minimum deposit is £1,000).

For those able to tie up their cash for two years, there are two-year bonds paying up to 5%, says Moneyfactscompare.co.uk. In terms of better-known names, Atom bank (minimum deposit £50) and Close Brothers Savings (minimum deposit £10,000) were paying 4.9% over two years.

However, not everyone will be willing or able to lock away their cash over the medium to long term. Some will prefer the flexibility offered by an easy access account. There are a few easy access accounts paying 5% or more, including ones offered by Oxbury Bank and Monument Bank. More well-known names offering decent rates include Leeds building society (4.85%) and Skipton building society (4.8%, but only one withdrawal a year allowed on this account).

As can be seen from those mentioned, the more eye-catching savings rates are mainly offered by smaller players such as challenger banks and building societies. If Britons’ savings are with a big high street bank and they haven’t looked lately at what rate they are getting, they may well find it is pretty rubbish.

Just over a year ago, MPs told Britain’s biggest banks to stop fobbing off loyal customers with “measly” savings rates, and the main regulator has also fired off warning shots . But despite that, the consumer group Which? says high street banks are still lagging behind with “paltry” rates.

The organisation examined savings rates between January and June 2024 on various types of accounts.

The interest rate gap between traditional high street banks and newer challenger banks and building societies was most pronounced with instant access accounts. In January, major banks were averaging a mere 1.9% interest on these. In contrast, building societies averaged 2.9%, and challenger banks 3.3%.

By June, the average rate for big banks had fallen to 1.6%, while the rates for building societies and challenger banks had remained stable.

If savers are on a poor rate, now is the time to move their money to an institution offering a better deal.