With the Bank of England once again reducing interest rates, savers may be considering alternative options.
Interest rates have been progressively sliced over the last year, with three cuts so far in 2025. The figure now stands at 4%, while inflation is currently 3.6%. This data will concentrate the minds of savers uncertain about what to do.
Some savers may consider tying up their savings in a fixed rate account that offers higher returns, albeit with more limited withdrawal access. Others might instead opt for a regular savings account. Here, it is worth noting that the highest rates don’t necessarily offer the best returns, given the limits on the amount deposited each month. It is a good idea to periodically check the returns on your savings and transfer to an alternative account if they offer higher interest rates.
Peer-to-peer or P2P lending is another option, but this can be risky, and is not covered by the Financial Services Compensation Scheme.
People with a greater appetite for risk may stop saving altogether and invest in stocks and shares. This strategy is vulnerable to the fluctuations of the stock market, spooked by transatlantic tariff tensions – although in the longer term, shares have been demonstrated to do better than cash.
At present, there is no indication of how low interest rates will go, although there is speculation there may be no further cuts until 2026. If you are seeking savings advice in Cheshire, give Hartey Wealth Management a call to set up an appointment.
