Martin Lewis warns Brits as yet another interest hike is imposed in the UK
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Martin Lewis has issued a warning to Brits ahead of another Bank of England interest rate hike.
The Bank of England is expected to impose its 12th consecutive increase, pushing the base rate up by a further 0.25 points – bringing it to 4.5 percent.
The Bank Rate had been 0.1 percent in December 2021, before increases were made in an attempt to tackle inflation.
However, this further increase means that the savings rates on offer at banks will be at the highest they’ve been in years.
He warned that ‘banks are taking advantage of customer inertia’ when it comes to their savings, with many of us holding our money in low interest saving accounts or cash ISAs ‘earning far less than one percent’.
According to the newsletter, some banks are offering almost five percent on their fixed saving accounts, while easy access savings accounts could be earning just shy of four percent.
Lewis explained: “Of course in reality, with inflation at over 10 percent, all savings are currently losings, as your money’s purchasing power is shrinking.
“But that’s why it is so important to maximise every penny of interest, to mitigate the loss. Yet so many people are failing to do this.
"You may be able to get quintuple the interest in minutes as the top savings fixes now pay nearly five percent - in fact, briefly they hit five percent but only via a short-lived deal on a special savings platform - and top easy-access near four percent."
On the matter of whether savers should lock into a fixed deal now or hold off to see if the interest rate rises further, Lewis said that the recent Bank of England hikes hadn’t caused banks to change their offers for fixed saving deals, as they are usually based on future predictions.
He added: “In fact, as the City prediction for interest rates this time next year has now dropped to 4.3 per cent, there's actually also a risk fix rates may drop relatively soon.
“It’s worth noting that the top easy-access accounts have closed the gap on the top fixed deals. Whereas back in November fixes paid nearly double easy-access, now it’s just a third more.
“This likely indicates that the City feels interest rates are peaking - as while top easy-access rates tend to move more with current UK rates, fixes look to future rates. The closing gap may indicate alignment.”