Why you must act NOW to lock down a top deal: A one or two-year fixed could help protect your cash from inflation
Savers are being urged to lock into a top-paying fixed-rate deal now because they won’t be around for long.
Rates are expected to continue drifting downwards, but a one or two-year fix could help protect your cash from inflation. A typical 12-month fixed deal now pays less than half what it did a year ago.
The average one-year bond paid 1.28 per cent in November 2019, compared with just 0.61 per cent this month, according to data analysts Moneyfacts.
Lock in: Rates are expected to continue drifting downwards but a one or two-year fix could help protect your cash from inflation
Savers were spared more misery earlier this month when the Bank of England announced it was keeping the base rate at 0.1 per cent.
But the bank also revealed it will pump a further £150 billion of emergency funds into the financial markets.
The move means banks don’t have to rely on savers for funds, so wipes out hope that rates will rise in the short term.
Top easy-access rates began to disappear within hours of the Bank’s announcement. Kent Reliance cut its rates for new savers from 0.7 per cent to 0.5 per cent, while Principality, Leeds and Yorkshire building societies also lowered rates.
Top-paying fixed accounts also bit the dust, including those from Newcastle and Hanley Economic building societies.
These latest changes follow a torrent of rate cuts after the move by National Savings & Investments (NS&I) to pay just 0.01 per cent from November 24.
But there is a glimmer of hope as smaller banks, far outstipping the big banks’ pittances. The catch is they are typically not on sale for long, sometimes only days.
New banks such as OakNorth, Wesleyan, and Zopa often pay the best rates. OakNorth is currently paying a near-top 1 per cent for one year, just below the top rate of 1.08 per cent from Al Rayan and they are regulator-protected.
Kevin Mountford, co-founder of savings platform Raisin, says: ‘If you see a decent rate, grab it as they won’t last long.
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