WHY NOW IS THE BEST TIME TO LOCK IN CASH ISAS AND SAVINGS ACCOUNT RATES

Savers are being encouraged to lock in higher-return deals now, as rates are expected to fall in the coming weeks.

The Bank of England is widely predicted to cut the base rate from 4 per cent to 3.75 per cent next week (18 December) which will have a knock-on effect on savings rates, experts say.

Savings rates have already fallen since the last 0.25 percentage point reduction in August making it even more pressing to act quickly and secure a top deal now.

While a cut to the base rate is generally good news for mortgage holders and the wider economy, it can be bad news for savers.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said: “Savers pay the price of cuts to the base rate, and the reduction in August has been no exception.

“Variable rates tend to get hit the hardest by base rate cuts, but fixed rates also come down too as providers catch up to their peers.

“Taking time to shop around for the best rates and switching is essential to get any cash working harder.”

Many savers are hit by the loyalty penalty – sticking with the same account they’ve had for years as a result of inertia.

As a result, many are losing money in real terms with inflation remaining high at 3.6 per cent.

High inflation is bad news for savers as it erodes the value of money held in the bank.

However, there are still several accounts offering above this amount – with top accounts offering as much as 5 per cent – although they may not be on the market for long.

Andrew Hagger, director of personal finance website Money Comms, said: “With a base rate cut seemingly nailed on for next Thursday, now’s a great time to fix your savings rate if you can afford to lock some of your nest egg away.

“Easy access rates will take a hit when the base rate moves, but it’s still worth moving if you’re currently on a poor easy access rate.”

Best savings rates on the market

Best easy access deals

cahoot – 5 per cent

Snoop – 4.25 per cent

Manchester Building Society – 4.25 per cent

Vanquis Bank – 4.25 per cent

Dudley Building Society – 4.25 per cent

Best one-year fixed-rate deals

Kent Reliance – 4.51 per cent

Investec Save – 4.5 per cent

LHV Bank – 4.46 per cent

DF Capital – 4.45 per cent

Habib Bank Zurich plc – 4.44 per cent

Best variable cash ISA deals

Teachers Building Society – 4.30 per cent

Plum – 4.28 per cent

Atom Bank – 4.25 per cent

Vanquis Bank – 4.25 per cent

Principality Building Society – 4.2 per cent

Best fixed one-year cash ISA deals

Tembo Money – 4.3 per cent

Investec Save – 4.3 per cent

Charter Savings Bank – 4.3 per cent

UBL UK – 4.28 per cent

Kent Reliance – 4.25 per cent

What type of savings account is best for you

Whether you opt for an easy-access rate, a fixed deal or an ISA will depend on your individual circumstance.

For example, easy-access deals are a good choice for people who might need to withdraw their money at any point.

A fixed deal is more appropriate for those who can lock their money away for a longer period of time, and benefit from generally higher returns as a result.

Ms Springall said: “Easy-access accounts remain a haven for savers, as they are a great choice for an emergency fund. Those who use these for convenience do need to compare rates regularly, as they get hit when the base rate gets cut.”

She also warned: “A few of the best deals carry bonus rates, so the responsibility is on the saver to be vigilant and switch before these expire. Savers may well prefer to open a savings account with a brand they trust, but such loyalty doesn’t always pay.

“A convenient way for consumers to save their money is to stash it in a current account, or a simple saver with their bank, but that’s not the best choice.

“These simple savers can pay shockingly low rates, so in real terms, the cash is eroded by inflation. Despite that, loads of cash continues to be put aside this way. While you can’t blame savers for wanting a ‘risk-free’ safety net to fall back on, it’s still important to compare rates.”

Cash ISAs are also still a good option – despite the limit being cut from £20,000 to £12,000.

Anna Bowes, personal savings expert at The Private Office, said: “Considering the markets are mostly anticipating a base-rate cut at the next Bank of England meeting, best-buy savings rates have held up pretty well.

“So now could be a good time to lock into a fixed-term account to hedge against any future rate cuts.

“And don’t forget cash ISAs. The allowance for the under-65s will be dropping to £12,000 a year from April 2027, so make the most of it whilst you can.

“Although at first glance it looks like cash ISAs pay a lower interest rate than the equivalent fixed-rate bonds, once you strip tax from the advertised rate, cash ISAs can offer better value to those who pay income tax on their normal savings.”

2025-12-12T07:49:01Z