Cash has made a comeback this year 💷 How interest rates on savings accounts finally started to rise in 2022 ⤵️
Despite rising rates, you still need to be picky about where you stash away your cash as some banks and building societies are quicker to pass on rate rises than others.
You usually get an increasingly higher rate the longer the fix, but what you get also depends on the outlook for rates. At the moment, banks think rates will fall in the long-term, so the difference between a two-year and five-year deal is quite narrow. She had about £25,000 in a savings account with Lloyds Bank — but she was only earning 0.1 per cent interest, or £25, a year. It had been even less before rates started to rise this year.
“I did some research on the best rates. I ended up looking at Zopa as it was near the top, and then the app and usability of it made me ultimately go for it,” said Gordon. “High street banks are happy to charge a fortune the moment you go 1p into your overdraft, but they don’t offer the equivalent reward for you keeping your accounts well-stocked.”One downside of higher savings rates is that some savers will need to start thinking about whether they owe tax on the interest they have made.
Inflation is expected to be about 5 per cent by the end of next year, which means that your savings will be worth less in real terms in a years’ time unless you were able to secure a rate of 5 per cent or above today.
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