Interest rates: Britons told take action to ensure they secure best deals in 2021 | Personal Finance | Finance
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Interest rates have tumbled recently, meaning it has been a challenging year for savers. In March, the Bank of England took the decision to decrease the Base Rate to 0.1 percent, the lowest in its entire history. Indeed, many familiar providers followed suit after the announcement, showing the widespread effect of the pandemic.
In subsequent reviews, the central bank has chosen to maintain the Base Rate at 0.1 percent.
However, there has been some speculation rates could dip further in the future.
A number of Monetary Policy Committee (MPC) members have expressed the potential benefits of negative rates for the economy.
However, the governor of the Bank of England, Andrew Bailey, has merely said the measure is “in the toolbox” and there are no imminent plans to use it.
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She said: “Looking towards 2021, interest rates are unlikely to rise over the next few months.
“There have even been murmurings of a potential base rate cut to come, so there really is no guarantee savings rates won’t continue to fall.
“Regardless of any apathy a low interest rate environment may instil in savers, it is imperative they take action to switch their accounts to get the best possible return on their cash.”
Ms Springall also advised Britons to keep a close eye on the market to make the most sensible decisions for their money going forward.
The organisation showed average easy access rates have dropped from 0.59 percent on New Year’s Day 2020, to a measly 0.19 percent on December 1, 2020.
Similar decreases have been noted across fixed year bonds, leaving little opportunity for savers to grow their money.
However, there are some options for those who are looking for security, and to grow their funds.
Government bonuses are available through a Lifetime ISA, and low-income savers can access a bonus through the Help to Save scheme.
There is also the tax-free allowance available through ISA savings accounts.
For the 2020/21 tax year this stands at £20,000, and this is set to remain the same for the forthcoming tax year.
It is not yet clear what will happen to interest rates in the coming year, whether they will be boosted, or if they will plummet further.
However, it is likely they will be impacted by the ongoing pandemic, the distribution of vaccines, and the way the Brexit deal unfolds.
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