Anyone with a cash ISA told to take this action now | Personal Finance | Finance

Savers are being urged to act fast and lock in higher-paying cash ISA and savings deals, with interest rates expected to head south within days.

The Bank of England is tipped to cut the base rate from 4% to 3.75% this week, a move that experts warn will quickly feed through to lower savings rates.

Rates have already slipped since the last 0.25% cut in August, piling pressure on savers to move quickly if they want to protect the return on their hard-earned cash.

While a base rate cut is welcome news for mortgage holders and the wider economy, it is often bad news for savers – particularly those who have left money languishing in poor-paying accounts.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Savers pay the price of cuts to the base rate, and the reduction in August has been no exception.

“Variable rates tend to get hit the hardest by base rate cuts, but fixed rates also come down too as providers catch up to their peers.

“Taking time to shop around for the best rates and switching is essential to get any cash working harder.”

Millions are also being hit by the so-called loyalty penalty – sticking with the same savings account for years out of inertia – and losing out as a result.

With inflation still running at 3.6%, many savers are seeing their money shrink in real terms as rising prices erode the value of cash sitting in the bank.

However, there are still a number of accounts paying above inflation, with top rates as high as 5% – though experts warn these deals may not be around for long.

Best savings rates on the market

Best one-year fixed-rate deals

Kent Reliance – 4.51%

Investec Save – 4.5%

LHV Bank – 4.46%

DF Capital – 4.45%

Habib Bank Zurich plc – 4.44%

Best easy-access deals

Cahoot – 5%

Snoop – 4.25%

Manchester Building Society – 4.25%

Vanquis Bank – 4.25%

Dudley Building Society – 4.25%

Best fixed one-year cash ISA deals

Tembo Money – 4.3%

Investec Save – 4.3%

Charter Savings Bank – 4.3%

UBL UK – 4.28%

Kent Reliance – 4.25%

Best variable cash ISA deals

Teachers Building Society – 4.30%

Plum – 4.28%

Atom Bank – 4.25%

Vanquis Bank – 4.25%

Principality Building Society – 4.2%

What type of savings account is best for you?

The right choice depends on your personal circumstances.

Easy-access accounts suit those who may need to dip into their savings at short notice, while fixed deals are better for people who can afford to lock money away in return for a higher guaranteed rate.

Ms Springall told The i Paper: “Easy-access accounts remain a haven for savers, as they are a great choice for an emergency fund. Those who use these for convenience do need to compare rates regularly, as they get hit when the base rate gets cut.”

She also warned that some top deals rely on temporary bonuses, saying: “A few of the best deals carry bonus rates, so the responsibility is on the saver to be vigilant and switch before these expire. Savers may well prefer to open a savings account with a brand they trust, but such loyalty doesn’t always pay.

“A convenient way for consumers to save their money is to stash it in a current account, or a simple saver with their bank, but that’s not the best choice.

“These simple savers can pay shockingly low rates, so in real terms, the cash is eroded by inflation. Despite that, loads of cash continues to be put aside this way. While you can’t blame savers for wanting a ‘risk-free’ safety net to fall back on, it’s still important to compare rates.”

Cash ISAs also remain attractive – even though the annual allowance has been cut from £20,000 to £12,000.