A day after NS&I announced rate cuts, savers are warned of more to come. But there are alternatives.
Savers are being warned to act fast to find a new home for their money after NS&I announced cuts to its best buy deals.
The Treasury-backed NS&I revealed a range of rate reductions yesterday that will take affect from 23 November and experts warn this could swamp competitors and restrict the availability of top deals on the market.
Anna Bowes, co-founder of Savings Champion, said there are no signs of rates being pulled yet as the NS&I deals won’t change until November.
However, she highlighted that a best buy easy access rate of 1.2% from Skipton Building Society lasted just two days last week, showing how quickly top deals can disappear.
She says: “My fear is that lot of people will withdraw money from the NS&I accounts and will be looking for a new home.
“The providers that are paying the best rates will then be pushed to the bottom as once they have fulfilled their funding requirements they will either close the account or reduce the rate to stem the flow of money.”
Bowes suggested savers can avoid being stuck with falling rates by opting for fixed rate bonds.
She says: “There are lots of fixed rates coming out that are paying better rates.
“These have been going up recently so one way to counter any negative impact of falling rates is to tie up some money if you can afford to do so.
“Savers need to understand that in many cases it is not possible to make any withdrawals with fixed rate bonds.”
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Kevin Brown, savings specialist at Scottish Friendly, suggested savers may be better off paying off debts.
He says: “Cash savers will feel they have almost nowhere to turn and will be wondering how long it might take for rates to return to pre-pandemic levels.
“For the time being, savers should consider whether the money they pay regularly into poor paying accounts could be better used elsewhere.
He said now could be a good time for people to divert some of their regular savings into paying down any debt that they have as any interest made on cash savings could be swallowed up by the interest on credit repayments and the effects of inflation.
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