With interest rates being cut dramatically to encourage spending amongst consumers, many consumers have been left wondering where the best place is for their money. Many savings accounts are linked in one way or another to the Bank of England Base Rate, which is now at an all time low of 1%.
Although the Base Rate being at an all time low is great news for people with base rate tracker mortgages as this means they are paying less interest back to their mortgage provider, it is not such good news for savers. Many savings accounts linked to the base rate offer the saver a guarantee that the interest on their savings account will be at least the same as the Bank of England base rate. This is usually great reassurance to savers as they feel secure about the interest they will receive on their savings but with the base rate currently so low many find themselves looking at other savings options.
For many savers a reduction in savings income is not a severe problem but for elderly people who have saved up their whole life in the hope that they will be able to rely upon the income generated from their savings, this is a major problem. The safest advice being offered at present is for these savers to invest their money in a fixed rate product. If the saver does not need access to their funds for a fixed period of, for example, a year, they can benefit from a higher interest rate which is fixed ensuring that they receive the same level of income irrespective of what happens to the Bank of England Base Rate.
For any person relying upon savings as a source of income fixed rate savings accounts can offer a lot of reassurance. Compared to a cash isaand other savings accounts fixed rates products are guaranteed and offer the peace of mind needed for many savers.
