Martin Lewis has predicted a drop in interest rates as dire as the record lows of 2016.
Britons found their saving potential severely weakened due to market turmoil.
Rates hit a low of one per cent, and have since climbed, albeit slowly, back to 1.5 per cent.
However, Martin has bad news for savers as it appears banks are racing to avoid being the best option on the market for savers. Why would they do it?
Martin explained: “The world economy isn’t looking good and the UK economy is looking uncertain.”
Noting that predictions for interest rates in the city have dropped, Martin continued: “Savings rates tend to depend on those long-term interest rates.
“What’s happened in the last couple of weeks reminded me of 2016 which was the absolute bottom of savings rates.”
Martin went on: “We had two accounts paying 1.5 per cent, Marcus and Cynergy. Marcus dropped its rate for the first time in nine or ten months to 1.45 per cent and then two days later Cynergy followed.
“What seems to be happening at the moment – and this happened in 2016 – is no one company wants to be the best buy, because when you’re the best buy a flood of money goes into that savings provider and they don’t want the money.
“So what happens is one drops, and the other drops, and if they’re both top there is a risk they will drop again.”
Martin said there was a “plausible scenario” that British savers will see a race to the bottom.
Therefore, the savings expert said: “I would consider fixing, fixed rates could get worse.”
A fixed rate savings account pays a set rate on interest over a certain period of time. However, you must also agree to keep you money in the account for a certain amount of time too.
He said: “You can earn 1.81 per cent if you can put money away and will know before you need it (eg, when you’re ready to buy a house).
“The top-paying notice account is Charter Savings at 1.81 per cent (min £5,000) –you’ll need to give 95 days’ notice to withdraw cash, and again it’s a variable rate.
“You can earn 2 per cent guaranteed if you’re prepared to lock cash away in a fixed account – although remember you won’t be able to touch your money during the time.
“The top-paying one-year fix is from Arbuthnot Direct at 1.86 per cent AER (min £10,000), if you’ve got less then Habib Bank (min £1,000) is 1.85 per cent.
“If you can lock money away for two years, FirstSave (min £1,000), Access Bank UK (min £5,000) and Arbuthnot Direct (min £10,000) all pay 2 per cent AER.”
For those who need access to their money, Martin said: “You can earn 1.45 per cent in a top easy-access account if you want to withdraw at will.”