UK inflation is nearing its target, but there’s still no certainty about the Bank of England rate cut.
The Bank of England will want to see more signs that inflation is under control before cutting interest rates. It’s expected that a rate cut might not now come until August, or even later.
Savings and annuities providers will be watching closely. And some could already be starting to act. So, how can savers get the most out of their cash in 2024?
Savings Beating Inflation
It’s important to stay ahead of inflation with your savings as it reduces the real term spending power of your money.
But the good news is it’s getting even easier. There’s now lots of rates in the savings market that beat 2.30% at the moment.
The bad news is that the best easy-access deals are highly unlikely to last.
Easy-access rates have been dropping across the board – a sign that banks are gearing up for a rate cut later this year.
When one or two of these banks start to cut rates, the rest tend to swiftly follow. The writing is on the wall for the 5% easy-access rate.
Fixed Rate Savings
For those looking to fix their rate, there’s still some great deals around, including some over 5%.
If you don’t need the money for any short-term commitments, it makes sense to consider fixing now. Unless expectations change significantly, we’re unlikely to see any big increases in fixed rates.
Finding a competitive fixed rate now means you can lock in that rate regardless of potential Bank of England cuts this year.
Just make sure you have access to your emergency savings before fixing, as you usually can’t withdraw from a fixed rate until the term ends.
Annuity Rates
The days of soaring annuity incomes are behind us. But they’re still good value.
A 65-year-old with a £100,000 pension can get up to £7,117 a year. That’s based on a single life annuity guaranteed for five years, and with no increase.
This is below the £7,586 highs of October 2022, but much higher than the £6,782 you would’ve got just a year ago.
With interest rates expected to hold, things should remain very much as they are. But when the rate cut does come, we could well see annuity rates fall. Of course, nothing is guaranteed though.
It’s important to remember that interest rates aren’t the only thing affecting available annuity rates.
By providing more details to an annuity provider, like disclosing any health conditions, it can increase the amount of income it pays.
To ensure you are maximising your savings, talk to one of our FCA authorised wealth managers by arranging a Discovery Call [Here]
This article is for informational purpose only. It does not constitute finacial, tax or legal advice, nor is it a recommendation to buy, sell or hold any investment. Past performance is not a guide to the future, investments rise and fall so investors could make a loss. No view is given on the present, future value or price of any investment and investors should form their own view on any proposed investment.