Smart Money - Looking forward to 2016


As mortgage borrowers across the UK breathed a sigh of relief, savers took yet another blow last month with the Bank of England announcing that interest rates are to remain unchanged with a future rate rise looking unlikely any time soon.

For over six years, UK savers have been trapped in a low interest rate environment, struggling to achieve any notable returns on their nest eggs – especially those with savings languishing in high street accounts paying paltry rates of interest. Indeed, our recent research found that more than a fifth of UK adults are earning interest of 0.50% or less on their primary savings account.

The level of people’s disappointment at the Bank of England’s latest guidance was perhaps inevitable, especially when you consider that just 4 months ago it was Carney’s view that rates could rise as early as the end of this year. Following this latest postponement, however, the Governor has now been dubbed in some quarters as ‘the unreliable boyfriend’ or ‘the boy who cried wolf’.

There are a plethora of factors which influence the UK’s interest rate, and while the continuing growth of house prices initially made a rate hike appear more likely, ultimately volatility in the global financial markets and low inflation have prompted the Bank of England to err on the side of caution once more.

All eyes now turn to the US, where savers have been battling against a base rate of 0.25%. Just a couple of months ago, it looked like there would be a race for which major central bank would be first to increase rates. But with this latest deferment from the Bank of England– not to mention the European Central Bank suggesting they were prepared to cut rates – it appears the US Federal Reserve is now likely to be first out of the blocks in the interest rate race.

It’s not all doom and gloom for savers in the current environment though.

Low inflation means things like doing the weekly shop, putting petrol in our cars and even stocking up for Christmas can all cost less, which all adds up to having more money in our pockets and so we should all be able to spare a little more every month for our savings.

And if most savers are only getting rock-bottom rates offered by the mainstream providers, then many may feel compelled to hunt out the better deals that are available. Indeed, the low interest environment has magnified the benefits of increased competition from challenger banks, like Charter Savings Bank, and this increase of competition can only be a good thing for savers.

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Financial Services Compensation Scheme

Your eligible deposits with Charter Savings Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit protection scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit