The Bank of England just took the base rate up. When will your savings rate go up? What's Chip doing about it?
As you'll know, Chip is not a normal savings account. We fight to bring amazing rates to you, as well as automatically build your savings.
The Bank of England has announced that they will increase the base rate from 0.10% to 0.25%.
This is important for savers because it could have an impact on the interest rate your bank pays you on your savings account. But it's especially big news for Chip savers, because we're already swinging into gear to bring you better rates.
And remember, you can now earn 0.70% (variable) AER on up to £85,000 on any price plan in Chip!
What's the base rate?
Busting the jargon.
The base rate of interest is set by the Bank of England (the UK's central bank that controls monetary policy), it's the interest rate they pay to commercial banks.
As a rule, when the inflation rate is high (prices are going up), the Bank of England raises the base rate to try to slow inflations down.
It's one of the biggest influences on the rates that banks charge people to borrow money or pay on their savings. So when the base rate goes up, savings rates should go up too.
What will happen to savings rate?
They could go up, but not right away.
It’s unlikely we'll see an immediate jump in savings rates, Banks will take a little while to decide what they want to do.
It likely depends on what happens after this rate rise. Essentially they'll be asking "will the Bank of England raise the base rate again?"
The last time the Bank of England raised rates in two consecutive quarters, the savings market saw rates go up.
But with many banking pundits speculating that it's likely we'll see the base rates rise again in early 2022, banks might react to this and up their savings rates now.
As a rule they'll up their notice accounts' rates first, followed by easy-access rates after.
Predicting the future (sadly Chip can't... yet)
Bear in mind the decision over what to do with the base rate has many unpredictable influences.
For example, after the Covid-19 outbreak in 2020 the BoE took the base rate from 0.75% to 0.1%. So without a crystal ball, it's hard to say for sure what will happen!
What's Chip doing to bring me better rates?
We're always hustling for better deals for you.
As always we’re working with the best people and banks to constantly bring you the best savings rates.
If rates increase as expected, rest assured we’ll be at the front of the queue aiming to deliver the best possible returns to Chip savers.
But right now you can earn 0.70% (variable) interest on up to £85,000 on all price plans in Chip. Read more here.
What can I do now?
The more savers, Chip has, the better rates we can bring you.
One of the most important aspects of Chip is that by negotiating on behalf of our users we can get the best rates possible. 400,000 people have so much weight, it truly is the power of the community. As Chip grows, this community will only have more power and be able to demand better terms.
So how can you help?
The more savers that save with Chip the more powerful we are. So, if you know someone who isn’t saving with Chip, please forward them this article and get them to sign up.