Interest rates are rising, which is good news for savers, but Britons are warning to “stay cool!”
INTEREST RATES HAVE RAISED RECENTLY, which is excellent news for savers, but experts have issued a warning about the precautions that Britons should take at this time.
Interest rates began to fall at the start of the pandemic, when the Bank of England stated in March 2020 that it would cut its base rate to 0.1 percent. While they’ve been sluggish since then, there’s been a ray of light recently, with interest rates – even on quick access accounts – slowly rising again. Savings rates that rise suggest that people will get a better return on their money saved.
This is likely to be the end goal of people who choose to save this way, but there are other factors to consider as well.
This website chatted with Claro’s Galina Stavskaya, Head of Investments, and Sarah Brill, Financial Coach, for more information.
Ms Stavskaya cautioned that, while interest rates are growing, inflation is also rising – presently at 2.1 percent – and that, if a bank offers less than this, cash holdings will lose value over time.
“Inflation, which occurs when there is increased spending and movement in the economy, causes rising interest rates,” Ms Brill continued.
“While this is encouraging news for an improving economy – especially after the previous year – the government will continue to strive to keep inflation under control.
“This is because if inflation grows too quickly, the price of products and services, as well as the cost of living, will rise.”
Claro has released new research that paints a bleak picture for many Britons.
Under a third of people under the age of 30 who earn £40,000 or more are classified as “High Income Perpetually Poor Young.”
Despite having a solid wage, this group has indicated that they often spend more than they make.
As a result, Ms Brill advises that everyone, regardless of age, take advantage of the best interest rates available.
If they don’t, they risk their money not keeping up with inflation, and their savings losing value.
When interest rates rise, savers will likely benefit because they will be able to earn a higher return.
However, given the uncertainty of the future, it will be necessary to plan ahead, especially considering the circumstances of the. “Brinkwire Summary News.”