The UK now has the lowest base rate since the creation of the Bank of England in 1694. While this is good news for some borrowers with tracker mortgages, this presents real problems for those in our community who rely on interest on savings to make ends meet.
What can savers can do to protect themselves? Well, thankfully there are some crumbs of good news out there. First, it is likely that the UK will see price deflation at some point this year meaning that even with low interest rates savers will get wealthier in real terms. Secondly, there are products out there which will generate returns significantly ahead of the base rate with little risk. Savers who are willing to lock their money away for a year or more should act quickly and take advantage of a leading fixed rate deal.
There are also savings accounts with special introductory rates which offer attractive options. In addition, corporate bonds from blue chips names like Sainsbury’s are offering double-digit yields — although corporate bonds can be quite complicated to buy, so it is better to invest in a well-managed fund.
It’s important to shop around as interest rates vary wildly — price comparison websites are a good tool. But remember that the Government only guarantees the first £50,000 of any bank deposit. So if you have more than £50,000 in savings, you should spread your money around to ensure it’s protected.