first direct has increased interest rate on savings account to 7%

Alice Haine, a personal finance analyst at Bestinvest, broke down how savers are being impacted by the ongoing cost of living crisis.

Ms Haine explained: “High inflation is bad news for savers who are looking for a decent return on their cash. While savers are gaining from much better rates than they have seen in more than a decade, inflation of 11.1 percent will quickly eat away at their nest eggs.

“However, with the Bank of England expecting inflation to halve by this time next year, locking in the best fixed rate now will pay off over the longer term as the gap between pay growth and inflation narrows.

“With the top easy-access account now at 2.75 percent and fixed deals of up to five percent – some savers may be tempted to hold off on locking their money away if they feel there are more rate rises to come.”

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