Interest rates took a tumble as a result of the Bank of England’s decision to lower its base rate in March 2020 to 0.1 percent. Many familiar providers followed suit, making it a challenge for those who were hoping to grow their money. As the challenging situation continues for savers, speculation has mounted about the potential for negative interest rates.
However, once a person has established their emergency fund of savings, there are alternative actions which can be taken.
Ms Brain continued: “You should then be thinking about your longer-term plans, whether that’s saving for a house or a holiday or a car.
“If it’s any of those longer-term things, then you don’t need to opt for easy access and those longer-term savings products will provide you with that bit more in interest.
“With all this uncertainty when it comes to rates, it may be worth locking some money away if you can.
“If you’re saving for something in particular, get a fixed interest rate account so you know exactly what you’re getting.”
If someone has achieved these goals and feels financially secure in their savings, Ms Brain then suggested turning to problem debts.
Interest on products such as credit cards and loans, as well as a mortgage if a person has one, can easily rack up and so paying debt down can be key.
With rumours continuing to mount about negative interest rates, many people are fearful about the potential of having to pay to save, and some have suggested removing funds from bank accounts altogether.
However, Ms Brain concluded by offering a vital warning on the potential implications of this course of action.
She said: “Your money is much more safe and secure in a bank than it is under your mattress. It’s also surely better to get something for you money than nothing at all.
“Keeping your money in a bank also makes it easier to transfer to others, and if you want to buy that car or pay for that holiday, you won’t be able to do that with a wad of cash, particularly at the moment because many places just simply aren’t going to take it.
“In addition, there can also be a limit on your home insurance, and if you were to be burgled for instance, your insurer may not pay out.
“There’s also the potential for silly things to happen, where the dog could jump up and rip your cash apart or your baby could get hold of it.
“While 0.5 percent doesn’t seem like much, even if it’s just going in your back pocket for a beer every once in a while, it is giving you back something for your money which is key. It’s also keeping your funds safe.”
Most banks are protected under the Financial Services Compensation Scheme (FSCS).
This means Britons will have money up to the value of £85,000 should the worst happen.
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