Martin Lewis flags best account to ‘protect’ savings as he predicts interest rates to fall

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Following a break over the festive period, The Martin Lewis Money Show is back on ITV, bringing viewers the latest money tips. With the UK now experiencing stringent lockdown restrictions once again, support for those hit by the financial impact of coronavirus was of course a central theme this evening.

The money expert discussed support schemes including the Coronavirus Job Retention Scheme (known as the furlough scheme), the Self-Employment Income Support Scheme (SEISS) and Universal Credit.

He also discussed how the current UK lockdown has impacted the savings market.

Martin began his explanation by referencing analysis by AJ Bell, who this week said the chances of an interest rate cut in 2021 are now at 50 percent

“Pre lockdown, it was 30 percent chance of a cut, 70 percent [chance] of a hold,” the financial journalist said.

“Now rates are now 0.1 percent so what does a cut mean? It means either zero or even worse – negative interest rates.

“I think in any case, saving rates from where they are right now are likely to fall further because they tend to be based on the long-term prediction of interest rates and you can see that that’s going lower.”

Following his prediction, Martin shared his suggestion on what savers with substantial sums in the bank should do.

He said: “If you’ve got savings, bigger amounts, and you want to protect them, what you do, well you put it in a fix where the rate is guaranteed but you lock your money away without access.”

Martin went on to point out what the current top paying fixed rate savings account is.

“Right now, the top one-year fix comes from Ahli United Bank which pays one percent,” he said, adding that this needs to be accessed via the savings marketplace Raisin.

He explained up to £85,000 is protected per person in this bank account via the Financial Services Compensation Scheme (FSCS).

“Next best is Atom at 0.6 percent – that’s a massive differential which tells me I doubt [the rate offered by] Ahli will be around for that long.

“If you can’t fix, Premium Bonds pay one percent,” he began, before pointing out this is not guaranteed.

“Of course though, you’re gambling there on the interest, not the capital, but they are a decent bet for bigger savers at the moment.

“But the rate is variable – that could come down too.”

Elsewhere during the show, Martin urged people not to “dismiss” Universal Credit.

He pointed out that many may not realise they are eligible for the financial support.

Martin also explained the amount of help could reach up to £1,500.

The Martin Lewis Money Show Live continues on Thursday on ITV at 8.30pm.

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