The Bank of England has today dropped the base interest rate to an all time low of 1.5% in a continuing bid to rescue the UK economy. The half a percentage point drop sees the rate drop below 2% for the first time in the Bank’s 315 year history.
With this latest cut the Bank has now reduced rates by 3.5% since October when rates sat at 5% but some have said that a bigger step down should have been taken by the monetary policy committee.
With many experts and analysts predicting or even calling for further rate cuts it is very likely that this drop is not the last we see in the first quarter of 2009 so what should a saver do in this situation? Act quickly and you may be able to lock in a higher rate for some time.
For a short period lasting as little as a few hours it might be possible to get a fixed rate deal particularly on an ISA if you are able to leave your investment untouched for a period of between one and three years. These types of ISAs are currently the best way to secure against the continuing decimation of interest rates.
Alternatively, with the interest rates for cash ISAs so low right now, it is at least worth considering investing some money into the stocks and shares portion of your tax free allowance. The market tumbled rapidly over the last quarter of 2008 but this means some bargains now exist in the marketplace and there are literally hundreds of funds to choose from, some of which are in emerging markets which may fair better in the world economic situation.
Whatever you do now do it quickly; the deals could be gone at any time as the banks seek to minimise their exposure to higher interest rates for new customers.
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