Savers are being urged to act now ahead of an expected Bank of England interest rate cut on Thursday.
The majority of economists polled by Reuters are currently forecasting a base rate reduction from 5% to 4.75% when the Monetary Policy Committee (MPC) meets later this week. The base rate has an impact on what banks and lenders charge you when you need to borrow money - but it also affects the rates you’re offered on your savings.
If the base rate goes down again - it was reduced from 5.25% to 5% in August but held at 5% in September - then it could mean some savings rates will also be reduced. This means you should check what savings rate you’re currently getting and if you can beat it elsewhere.
Sarah Coles, head of personal finance, Hargreaves Lansdown: "The savings market is tethered to the push-me-pull-you of rate expectations. The banks are fairly certain we’ll get a cut this week, so we saw some savings rates continue to drop last week. However, they’re less convinced we’ll have cuts further ahead, so some rates are rising."
She added: "It’s not worth hanging on in the hope that savings rates shoot up again. If your bank has cut your easy access rate, now is the time to shop around, because while 5% deals are vanishingly rare, there are still plenty offering 4.8% or more.
"If you were planning to fix for a period, there are some still decent rates on fixes for less than a year, so you can lock in more than 4.8% over six months or a year. If you fix for longer, deals move closer to 4.5%, but if rates fall as expected over the coming years, that’ll look increasingly rewarding."
There are different types of savings accounts. An easy-access account allows you to make withdrawals whenever you want, so these are a good option if you may need access to your cash. Some providers do limit how many withdrawals you can make in a set period of time, so make sure you read the terms and conditions carefully before opening an account.
But the rates on easy-access accounts are often variable, so they can go up or down. If you can afford to lock your money away for a set period of time, then there are fixed rate accounts. These offer you a fixed interest rate for a period of time, which means if interest rates continue to go down, your rate won’t be affected.
Regular saving accounts pay the best rates - but you're normally limited to how much money you can save each month. Principality Building Society pays 8% fixed for six months on up to £200 a month. First Direct, Skipton Building Society and Co-op Bank each pay 7% for one year. Some are fixed and some are variable and the deposit amounts vary between £250 and £300 each month.