Interest rates fell following the Bank of England’s decision to lower its base rate in March 2020 to 0.1%. Many familiar vendors have followed suit, making it a challenge for those hoping to make their money work. As the difficult situation continues for savers, speculation has intensified on the potential for negative interest rates.
However, once a person has established their emergency savings fund, further steps can be taken.
Ms Brain continued: ‘You should then be thinking about your longer-term plans, whether that’s saving for a house, a holiday or a car.
“If it’s one of those longer-term things, you don’t have to opt for easy access and those longer-term savings products will get you a bit more interest .
“With all this rate uncertainty, it might be worth putting some money aside 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, then Ms. Brain suggested turning to problem debt.
Interest on products such as credit cards and loans, as well as a mortgage if a person has one, can easily accumulate and debt repayment can therefore be essential.
As rumors continue to mount about negative interest rates, many people are worried about having to pay to save, and some have suggested withdrawing funds from bank accounts altogether.
However, Ms Brain concluded by offering a vital warning about the potential implications of this course of action.
She said: “Your money is much safer in a bank than under your mattress. It’s also surely better to get something for your 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 vacation, you won’t be able to do that with a wad of cash, especially right now because a lot of places just won’t take it.
“Additionally, there may also be a limit to your home insurance, and if you were to be burgled, for example, your insurer might not pay.
“There is also the possibility of stupid things happening, where the dog could jump up and rip your money or your baby could grab it.
“Although 0.5% doesn’t seem like a lot, even if it goes in your back pocket for a beer once in a while, it gets you something for your money, which is essential. It’s also about keeping your funds safe.
Most banks are protected by the Financial Services Compensation Scheme (FSCS).
This means the Brits will have cash up to £85,000 worth should the worst happen.
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