Martin Lewis urges savers to lock in to fixed-rates NOW

MARTIN Lewis is urging savers to lock away cash in fixed-rate accounts to avoid potentially plummeting interest rates.

The MoneySavingExpert explained in his newsletter how banks have dropped interest rates over the past few weeks – and warns that they could slip further.

Banks set interest rates on lending and borrowing based on expert predictions about the future of the economy.

Due to Brexit uncertainty and a "gloomy" world economy, banks and building societies have slashed interest rates to protect themselves from any future crashes.

But it means that people are missing out on how much they can earn on their savings.

It comes as both Marcus and Cynergy cut the amount it paid for its top-rate easy-access accounts from 1.5 per cent to 1.45 per cent.

What are the top-rate savings accounts?

THESE are the accounts that pay the top-rates on your savings:

  • Easy access: Marcus and Cynergy

Minimum investment: £0

Rate: 1.45 per cent

Interest on £1,000 over a year: £14.60

  • Notice: Charter Savings

Minimum investment: £5,000

Rate: 1.8 per cent

Interest on £5,000 over a year: £90.75

  • One-year fixed: Wyelands Bank

Minimum investment: £5,000

Rate: 1.88 per cent

Interest on £1,000: £94.81

  • Two-year fixed: First Save

Minimum investment: £1,000

Rate: 2 per cent

Interest on £1,000: £40.78

Although he can't predict the future, Martin reckons it's worth hedging your bets and locking into a fixed-rate deal if you're worried about rates dropping even more.

But he also pointed out that if you fix in now, you risk missing out on a better deal if rates rise before your term ends.

He wrote: "It's somewhat perverse to consider that as fixed rates have dropped, you may want to lock in.

"Yet there is a realistic chance they could get lower still, so that in a few months we look back on today's deals and think they're pretty decent.

"Sadly I don't have a crystal ball, so I can't say this is what'll happen, but if you're worried about plummeting rates and want certainty, it may be worth hedging toward fixing."

How to find the best savings account 

HERE are some tips on how to find the best type of savings accounts for you, according to the Money Advice Service: 

How much you're looking to save and how long for will affect the type of account that's best for you.

If you have more than one goal, then multiple savings account might be a sensible choice.

Many accounts offer top rates as introductory offers that only last a year.

To get the most out of your savings your best bet is to switch accounts when the offer is up – but are you actually going to be bother to switch?

If you don't have time to keep moving your money about then maybe look for an account that has a more stable rate.

If you plan to top-up your savings on a monthly basis then a regular saver or fixed-term account may work better for you as you may be able to earn more.

Tax-payers should look at saving into a tax-free ISA – but make sure the interest rate is decent or the tax benefit will be cancelled out by lower returns.

Unfortunately, rates are only a smidgen on what they were before the 2018 financial crash.

In July 2017 the Bank of England set the base rate – what banks and building societies use to set interest rates – as at 5.75 per cent, compared to 0.75 per cent now.

If you want to get the most out of your savings you should shop around for an account that gives you the best deal.

You should also think about the best type of account that will suit you.

For example, an easy-access account typically pays lower rates but lets you withdraw cash at any time without paying a penalty.

Better rates are paid on longer fixed-term deals but you'll be charged for taking out the money before the term ends.

You can also save up to £20,000 tax-free in an Individual Savings Account, or ISA.

Although you can own more than one ISA, you can only invest in one per tax year.

We've put together a guide to the top-paying savings accounts to help you get the most for your money.

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