Credit Card / Credit Interest / Savings

Close call as base rate held at 5.25%

Today the Bank of England kept interest rates at 5.25% despite may economists predicting a rise to 5.50%

The MPC vote was by the narrowest possible margin (5-4 in favour of a hold).

The last time the rate moved to 5.50% was in December 2007. 

TotallyMoney, the credit experts, in conjunction with Moneycomms, has compared the difference in rates for easy access savings accounts and credit card rates from December 2007, with what’s on offer today.

Savings comparison

Top Easy Access Savings Rates 2007
Abbey (Santander)6.40%
Birmingham Midshires6.33%
Bradford & Bingley6.30%
Top Easy Access Savings Rates Today
Paragon Bank5.05%
Kent Reliance5.01%
Gatehouse Bank5.00%
Scottish Building Society5.00%
Shawbrook Bank4.95%
Savings rates on easy access accounts may be lower than in 2007, but it’s still worth shopping around to ensure your savings pot is earning a near best buy return.

If you stay put on a below average rate then it’s your bank that will be making a profit at your expense, so take action and put the extra cash in your pocket instead.

Alastair Douglas, CEO of TotallyMoney said:

“Since the hikes began, banks have dragged their heels in passing the benefits on to savers, with some of the worst offenders barely shifting the dial. However, there are some good deals out there — but you’ll need to move fast, as they’re often ready to pull products from the market at any time. 

“Even if you think it’s just a percent or two, it could make a material difference, as inflation is still high, and it’ll be eating away at the value of any cash sitting in a low-interest account. So remember, loyalty doesn’t pay, and if you’ve been with your bank for a while, it’s unlikely they’ll be paying you as much interest as they could be.

Credit Card Comparison

ProviderDec 2007Sep 2023Increase
Abbey (Santander)15.90%22.90%7%
John Lewis16.90%27.90%11%
Sainsbury’s Bank15.90%23.90%8%
Tesco Bank16.90%24.90%8%
Virgin Money15.90%23.90%8%

The cost of credit card borrowing continues to creep up and is another unwelcome cost pressure for those who struggle to pay their card statement off in full each month.

Credit card borrowing may be more expensive but it’s still cheaper than most agreed overdrafts where rates of 35% to 40% are commonplace, so switching some debit card spend to credit card makes sense if you’re often in the red with your current account

Alastair Douglas, CEO of TotallyMoney said:

“Since 2007, APRs on purchase cards have quietly been on the rise and are now up to 11 percentage points higher, earning banks considerably more money from customers than a few years ago.

“If your introductory offer is over and you’re finding yourself paying interest each month, do some calculations to see if a balance transfer credit card is right for you. For a small fee it’ll let you press pause on interest payments, currently up to 29 months. That means you can focus on paying back the balance quicker, use the money to cover other expenses, or start saving.

“In addition to slashing the longest offers, some lenders are being more careful about who they lend to. So make sure your credit report is up to date to give yourself the best chance of unlocking the best products.”

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