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You will notice that interest rates are frequently in the news right now.
The experts predicting that the Bank of England Base Rate will rise to 4.5% this month to try and stem high inflation. It is a major news topic because it will impact everyone’s finances in one way or another. This post will look at how rising interest rates can affect you and why it might be worth changing your savings account.
How Interest Rates Affect Finances
Interest rates affect people’s finances in two ways – through saving and borrowing. Those that need to borrow money for a loan, mortgage or any other type of borrowing will find that they have to pay more interest each month and this can be a significant amount on a mortgage. While rising interest rates are bad news for those borrowing money, they can be good for savers because you can earn more money on your savings.
Are Your Savings in the Right Place?
With interest rates rising, banks are putting up their rates as a way to attract new customers and retain existing ones. This is why now is a good time to check the interest rate on your savings account and research online to see if you could be getting more from your money elsewhere. Personal Finance expert Martin Lewis claims that millions are being “ripped off” by banks with low-interest rates when saving rates are at their highest in 14 years. There are many banks offering better interest rates and it is worth switching so that you can grow and compound your savings, especially during periods of high inflation.
What’s the Best Account for Me?
So, what is the best savings account? This is not an easy question to answer as it will depend on your needs. For some people, they may need easy access to their savings and this comes at a cost with lower interest rates. If you are able to lock away your savings for 1 year+, you can benefit from the top interest rates.
There are also regular savings accounts, which provide better rates than easy access but do require a deposit of a set amount each month. Cash ISAs are a tax-free way of saving but it is unlikely that you will earn more interest and access conditions can vary. Therefore, it is important to consider your needs in terms of access and then research online to find an account that ticks all the boxes and offers a high-interest rate.
With interest rates rising, now is a good time for savers to consider their options and find savings accounts with the best interest rates. Switching is usually simple and straightforward and this could help you to earn more money, which is helpful with the cost of living so high right now.