Buy a one-year bond today or you'll lose thousands, experts warn
Savers have been urged to lock in the best deals or risk missing out on thousands after rates start falling.
The Bank of England is expected to cut interest rates from 4.5pc to 4.25pc on Thursday amid growing concerns about the economic impact of Donald Trump's tariff announcements.
This could be followed by up to three more rate cuts in 2025, economists predict, with some expecting the Bank Rate to fall to 3.5pc by early next year.
However, this means savers may be running out of time to secure the top deals.
Anna Bowes, of financial advice firm The Private Office, said: 'If you've been thinking about locking away some of your savings, now might be a good time to act – before rates fall further.'
Some fixed-rate accounts have already dropped in anticipation of a rate cut.
The average rate on a one-year bond has fallen from 4.19pc to 4.12pc month-on-month, according to financial data provider Moneyfacts.
Fixed-rate savings accounts let you lock in a certain rate for a specific period – generally the longer you lock your money away, the higher the rate.
Sarah Coles, of stockbroker Hargreaves Lansdown, said: 'You'll need to pick the right length of fix for your circumstances – or a combination of a few of them – but if rates continue to come down as expected, these deals will look increasingly attractive.'
Tandem Bank, GB Bank and Cynergy Bank are currently offering the highest rate on a one-year deal at 4.55pc. A saver holding £85,000 in a one-year fixed rate bond paying 4.55pc would earn £3,949 in interest.
By comparison, a bond paying just 3pc would earn them only £2,585 – a difference of £1,364. The top rate on a two-year bond is slightly lower at 4.48pc with JN Bank.
Savers are generally advised not to hold more than £85,000 with any one financial provider. This is because £85,000 is the maximum they can claim under the Financial Services Compensation Scheme if the firm goes under.
Savings rates have been coming down ever since the Bank of England started cutting rates last year as inflation cooled.
Caitlyn Eastell, of Moneyfacts, said: 'In the past year, many of the top rates have tumbled, savers coming out of a one-year bond could now be £53 worse off in real cash terms.'
Banks are usually quick to pass on rate reductions to savers, with over 40 providers slashing the rates on their accounts in the week after the last rate cut in February.
On the bright side, a rate cut should bring some relief to mortgage borrowers. Lenders have already started slowly lowering rates which means some homeowners may see a reduction in their monthly payments when they come to remortgage.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Auto Car
30 minutes ago
- Auto Car
Volkswagen's first electric GTI will get a hotter 282bhp Clubsport model
Hardcore version of first electric GTI set to bring mechanical limited-slip differential and big power boost Close Volkswagen is developing a hardcore Clubsport version of the upcoming ID 2 GTI, according to insiders. The front-wheel-drive ID 2 GTI, revealed in near-ready concept form, is due on sale towards the end of 2026 with around 223bhp from VW's new-generation APP550 electric motor. But Autocar has learned that engineers at VW's research and development centre in Braunschweig, Germany, are also working on a more potent and focused range-topper, targeting a peak output of 282bhp. Alongside the additional power, this flagship – in keeping with the hot Golf Clubsports that have gone before – is being conceived with a series of mechanical and electronic upgrades. Chief among them is a fully mechanical limited-slip differential, which offers torque-vectoring capability between the front wheels. 'We're not working with brake intervention,' said one source. 'It's a fully mechanical system.' Further upgrades under consideration include variable torque delivery and a virtual gearchange function. Together, these systems modulate how quickly torque builds with speed and throttle input to reduce jerkiness under hard acceleration while replicating the stepped response of a traditional manual gearbox. Both ID 2 GTI variants will be based on the MEB Entry platform (internally known as MEB-21) and are expected to use the APP550 motor also used in other recently unveiled or upgraded Volkswagen EVs. 'We're arriving late, but with force,' said one Volkswagen insider. Although a launch date has yet to be confirmed, the ID 2 GTI Clubsport is expected to follow the template set by previous Golf GTI Clubsport models, which have historically offered more power, sharper chassis tuning and limited-edition status over their standard GTI counterparts. The first Golf GTI Clubsport was launched in 2016 to mark the GTI's 40th anniversary and was followed by the Clubsport S – then a Nürburgring record holder with a stripped-out interior and manual gearbox. The current Golf GTI Clubsport is powered by a 296bhp 2.0-litre four-cylinder turbo petrol engine and features bespoke ECU mapping, chassis upgrades and adaptive suspension tuning. It is positioned as Volkswagen's fastest and most advanced front-wheel-drive hot hatchback to date. Join our WhatsApp community and be the first to read about the latest news and reviews wowing the car world. Our community is the best, easiest and most direct place to tap into the minds of Autocar, and if you join you'll also be treated to unique WhatsApp content. You can leave at any time after joining - check our full privacy policy here. Next Prev In partnership with
Reuters
33 minutes ago
- Reuters
Italy's Eni sells 20% of Plenitude unit to Ares for 2 billion euros
MILAN, June 23 (Reuters) - Italy's Eni ( opens new tab said on Monday it signed a deal with Ares Management Alternative Credit funds (ARES.N), opens new tab worth around 2 billion euros ($2.30 billion) for the sale of a 20% stake in its retail and renewable unit Plenitude. The transaction, for which Mediobanca acted as Eni's financial adviser, gives Plenitude an equity value of 10 billion euros, corresponding to an enterprise value of more than 12 billion euros. The deal is part of the Italian energy group's long-term strategy to find partners to jointly develop its businesses. ($1 = 0.8693 euros)
BBC News
43 minutes ago
- BBC News
Highland-wide holiday lets control zone proposed by councillors
A Highland-wide control zone to limit Airbnb-style lets has been suggested as a way of tackling a shortage of homes across the proposing the move said 7,011 short-term let licences had been granted across the Highlands, but only four lets are not banned in control areas, but operators need planning permission as well as a short-term lets councillors said the powers could be used where there was local demand for them. Highland Council officials said control area status for the whole of the Highlands would require research and, if it was introduced, could mean additional costs and workload for its planning department. The idea of Highland-wide status has been suggested by Inverness councillors Michael Gregson and Duncan a paper going to next week's meeting of the full council, they said the region needed more than 24,000 homes over the next 10 added: "The private long-term rental market has shrunk disastrously: estate agents are withdrawing from letting out properties because of the shortage of properties available. "Even taking into account the efforts of Highland Council and the Housing Associations, there is a shortage of affordable housing."The councillors said the local authority should first ask the Scottish government to revisit its original plan to have an overprovision policy within short-term lets said if that was not possible, then to seek approval for Highland control area their response, officials said there would be financial implications for the local authority around both suggestions from the also said there could be potential challenges to Highland-wide of Edinburgh Council had to amend its licensing scheme following a court ruling. The whole of the City of Edinburgh Council area was designated Scotland's first short-term let control area in September 2022.A law requiring operators to have a licence came into force across Scotland in October the following Council's first control zone was approved in December 2023 and covers Badenoch and who supported its introduction said it was needed because workers and local young people had difficulties finding affordable the Association of Scotland's Self-Caterers (ASSC) said at the time that targeting legitimate small businesses to address longstanding housing issues showed "a muddled sense of priorities".
