Millions of UK households told to ‘open new bank account’ after Thursday update

The Bank of England has left interest rates on hold at 4.25% this week and savers are being told to act due to the knock-on impact.

Millions of savers are being told to open a new bank account after an announcement on Thursday. The Bank of England has left interest rates on hold at 4.25% this week and savers are being told to act due to the knock-on impact.

As it stands, Money Facts Compare reported over 1,400 savings products still offer interest above the current inflation rate of 3.4 per cent. It means savers need to act to capitalise on the rates and get more interest for their hard-earned cash.

Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk, said: “Savers continue to be hit by the handful of base rate cuts over the past year as all the top rates for non-ISAs have dropped compared to the market leaders in June 2024.”

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She added: “Consumers need to consistently search for the best accounts to avoid receiving a raw deal and act swiftly so they can grab the most popular deals before they are pulled or worsen.”

Ms Eastell said: “It may be a good time for savers to consider the benefits of locking away their cash for the next five years.” It comes days after six members of the Bank’s nine-member monetary policy committee (MPC) voted to keep rates on hold while three supported a reduction to 4 per cent, to add to the four quarter-point cuts since last August.

The Bank’s governor, Andrew Bailey, said interest rates “remain on a gradual downward path” after “seeing signs of softening in the labour market”. The MPC to reduce rates at its next meeting in August, and again to 3.75 per cent before the end of the year.

The MPC said in its report that business surveys “had continued to point to weak underlying GDP growth”. A forecast for the rest of the year said growth would be just 0.25% in each quarter, though “slightly higher” than expected in May.

Kathleen Brooks, the research director at the foreign exchange dealer XTB, said the Bank was mainly concerned with bringing inflation down to its 2% target, but it “sounds more worried about the growth outlook than the inflation outlook”.

Paul Dales, the chief UK economist at Capital Economics, said: “We think it’s only a matter of time before the weakness in employment will lead to a big easing in wage growth. As a result, we continue to expect quarter-point cuts in August, November and February.”