Personal Finance | 16 March 2023

Savings accounts: Building towards your near-term goals

As interest rates rise in a bid to tackle elevated inflation, savers could be benefiting from the increased rate environment.

 

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What’s happening in the market?

After rising energy prices and supply chain issues caused prices to soar, central banks raised rates to try and tame these increasing prices, encouraging consumers to limit spending and to keep their cash in deposit accounts.

What’s next?

Over the last decade we’ve experienced a period of low interest rates, followed by a succession of rapid increases. After seeing evidence of inflation reducing, we now expect base rates to fall and stabilise over the coming years.

The graph below shows how the market is pricing in the next 10 years, which shows a peak in the near term, falling back towards about 3% over the next five years, and then stabilising beyond that.

Central banks' key policy rates

(%, Feb 2023 to Jan 2033 is forecast based on forward curves)

Source: Bloomberg, Bank of England, Fed Prime Rate

This should not be viewed as predictive of actual future interest rates, they are merely the market-implied rates based on observable data today.

What this means for you?

As central banks, like the Bank of England, raise interest rates, private and commercial banks also tend to raise rates across their products.

At Coutts, we have a range of savings accounts for private and commercial clients tailored towards your cash management needs. Could you be taking advantage of these to support you in achieving your financial goals?

Our top tips to make your money work for you:

  • 1. If you don’t need instant access to your funds, consider capitalising on higher interest rates with a notice account or fixed term deposit.

    Our fixed term deposit offers the assurance of a pre-agreed rate, with enhanced pricing the longer you lock your funds away for. It has no maximum balance limit, you can choose from a variety of maturity periods, or set a specific date that suits your needs, and it’s available in a range of currencies.

    Our notice account also offers enhanced pricing but allows you to withdraw funds when required, following a pre-agreed notice period. They’re available in a number of notice terms and are appropriate for those with medium-term savings needs where instant access is not required.

  • 2. Make the most of your money with a Cash ISA.

    A Cash ISA allows you to save up to £20,000 each tax year without paying tax on any interest earned.

    If you have any surplus income, you may wish to consider maximising your savings via this route. Our ISA provides additional flexibility as you can add and remove funds throughout the year, without it impacting your allowance.

  • 3. Make use of our savings features to maximise your returns.

    Savings accounts offer a variety of features designed to make it easier for you to manage your money and achieve your financial goals.

    If you have both a current account and savings account with us, consider whether setting up a sweep would help you realise your goals. Sweeps automatically transfer funds between accounts with pre-agreed values and criteria determined by you.

    From testing with representatives of our Client Council, we learnt that clients who used sweeps were almost 50% happier with the amount they saved compared to those who don’t.

    We also offer tiered interest rates across several of our savings accounts, providing you with enhanced returns dependant on the value of funds held.

At Coutts we offer a wide variety of savings accounts that could suit your short, medium and longer-term needs.

If you’d like to learn more about what accounts are available at Coutts, their interest rates and which one could be right for you, please speak to your private banker, or find further information here.

 

Interest rates and tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances. Eligibility criteria apply. 

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