2024 was the biggest savings boom since the days of the pandemic, with a gold rush into easy-access savings accounts rounding the year out.
With deposits rising, but interest rates looking likely to fall in 2025, what’s next for savings rates and where’s offering some of the best rates?
This article isn’t personal advice. If you’re not sure if an action is right for you, ask for advice.
Record subscriptions, but where did savers put their money?
In October, we saw the biggest savings dash since the end of 2020, and more squirrelled away than any month on record before the pandemic. Household deposits into banks totalled £20.2bn, with £14.4bn of that nestled into interest-bearing easy-access accounts.
Easy access savings accounts were most popular, with their rates higher than their fixed interest counterparts in October.
For example, the best easy-access rate was 5% at the start of the month, ahead of the best one-year fixed rate at 4.95%. This even stretched towards the end of the year with the market leading rate falling to 4.80% for one-year fixed rates by December.
12-month fixed rate versus easy access
Interest rate cuts on the horizon?
Post-budget, inflation spiked up to 2.5%, above September 2024’s three-year low of 1.7%, and is likely to remain above the 2% target throughout 2025 too.
With reduced growth prospects, stubborn inflation and fears the UK is in ‘stagflation’ territory, Bank of England (BoE) planned rate cuts were scaled back.
However, improving inflation data this month has signalled the BoE could look to now cut rates as soon as February.
If we do see a February rate cute, banks won’t hesitate to slash their savings rates too.
Easy-access accounts are normally the first to fall. That means savers should consider fixing sooner if you are able to rather than later to secure a higher rate for the longer term.
But bear in mind, the longer you fix for, the longer you’ll secure that rate. So, instead of picking terms for the rate, it makes sense to pick the term that suits your needs.
Remember, you usually can’t withdraw from fixed rates until the terms end.
How to find competitive savings rates?
Most of the competitive rates are from smaller providers, with the big high street banks relying on the fear of faff with switching.
But savings platforms, like Active Savings, can help.
It brings competitive rates on the market from different banks all through one easy-to-use online account.
It means you can switch banks with Active Savings with available money to find rates, from short and long-term fixes to easy access, all in one place, without spending lots of time shopping around yourself.
It offers long and short-term fixed rates, as well as easy-access accounts.
And, you can currently get cashback. Terms apply.
It’s also a good idea to make sure you’ve already built up an emergency savings pot you can get to quickly before fixing other savings.
The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.
Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).