Don’t Let Your Clients Miss Out On The Benefits Of Base Rate Rises
At last, savers have reason to cheer. After a decade or more of painfully low interest rates, the picture has started to change. Rates are on the up.
Earlier this month, the Bank of England increased the base rate - which informs how much savers earn and borrowers pay - to 4% meaning it’s now at its highest level in 14 years.
The hike marked the tenth consecutive rate rise after the Bank slashed rates to a record low of 0.1% at the start of the pandemic in March 2020.
Although the rise in the rate of inflation came off slightly to 10.5% in December 2022, it is still at a 40-year high and as Bank of England officials remain concerned about the dramatic rise in prices over the past year, it is expected they will increase rates again at their meeting next month.
This should all be good news for Britain’s army of savers.
But is it?
The raft of rate rises since late 2021 means savers can, in theory, earn more interest by moving to better-paying accounts.
However, several surveys suggest customers are not moving their savings to profit on these changes. A mixture of inertia and misplaced loyalty to their banks means Brits are collectively missing out on huge sums of money, interest they could accrue by simply moving their savings to another bank.
But another reason so many savers don’t bother switching is because they don’t think it’s worth it. They don’t believe the uptick in interest is worth the hassle of switching.
Unfortunately, in many cases, they’re right. That’s because a lot of the big banks simply don’t pass on the base rate rise to customers, so unless they know how to look beyond the usual big banks, they won’t benefit.
While the average standard variable rate mortgage has risen by 0.51 percentage points since December, a typical easy-access account has increased by only 0.26 points.
Despite five rate rises in recent months, savers rarely see the full benefit.
Who offers the best rates?
Challenger banks tend to offer some of the best rates on the market as they compete with one another to attract new customers.
A word of warning though. These headline-grabbing deals are often short-lived as people snap them up, so you’ll need to move quickly to avoid disappointment.
Building societies are another good place to look. They often announce savings-rate hikes within hours of a base rate hike.
Find top rates quickly
Keeping track of where your savings are and who’s paying what can feel like a full-time job. And when you’re juggling a range of your client’s financial needs, swapping banks to make the most of interest rates can fall by the wayside.
But there’s a simple way to shift your clients’ or company’s money around quickly, easily and efficiently.
A cash management platform, like Akoni, uses Open Banking technology to enable savers to monitor their money and seamlessly switch accounts when a better deal becomes available.
Akoni has 20 banking partners, 13 challenger banks and two building societies.
In addition, all our partners offer FSCS protection (or the local equivalent) of up to £85,000 per bank or up to £1 million for Temporary High balances, so you can make sure your money is 100% safe.
With Akoni, you can onboard with no fuss, deposit funds into a range of savings products, monitor multiple accounts at the same time, and we’ll alert you when new rates become available.
Ready to set up an account? Sign up for free now or set up a call to find out how easy it is to grow your money.