Savers also have to look out for effects of interest rate cut
December 31, 2007
Earlier this month the Bank of England announced that interest rates were at last being cut by 0.25%, taking the base rate from 5.75% to 5.5%. This followed a series of five interest rate rises since August 2006, taking the base rate from 4.5% at that time to 5.75% by July 2007. For borrowers on variable rate loans this means five interest rate increases and rocketing monthly repayments that left many struggling with their finances. The interest rate cut therefore came as welcome news to many borrowers, who hope to see rates continue to fall over the coming year.
However, it is not just borrowers that are affected by interest rate fluctuation, but also savers. Those with savings could see their interest rate being cut by 0.25% as a result of the interest rate cut, which is not such good news for those with substantial savings, where a quarter point cut can make a big difference to the amount of interest earned. A number of banks and financial institutions have already announced cuts on their savings interest rates.
Amongst the banks and financial institutions to announce cuts to their savings interest rates are Egg, Halifax, Marks and Spencer Money, National Savings and Investments, and several others – these cuts have been made on various accounts including online savings accounts and ISAs. A number of banks had foreseen the interest rate cut and had pre-emptively cut their savings interest rate before the base rate cut was decided upon.
Consumers are urged to keep an eye on their savings account interest rate, and to ensure that they continue to shop around to look for the best rates on deals on savings accounts in order to make their money work as hard as possible for them.
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