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Savings in 2023 – have fixed rate savings peaked?

The best fixed rate terms might be behind us. Here’s why, and how to make the most of your savings in 2023.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

While inflation fell to 10.5% yesterday, it’s still well above the Bank of England’s (BoE) 2% target. The BoE’s bid to tackle inflation in 2022 has given savers the highest fixed term rates in 13 years.

But even though the base rate’s predicted to peak in 2023, fixed rates are already dropping back. Savers who wait too long risk worsening the effect of inflation on their money.

We take a look why now could be the time to fix your cash at the best rates you can find.

This article gives you information to help you make the most of your money, but it isn't personal advice. If you're not sure if a certain action is right for you, seek advice.

Savings providers look to the future

The BoE raises the base rate to bring inflation down. This makes borrowing more expensive and makes saving more attractive – the result hopefully is, people spend less.

Inflation is forecast to drop back to 5% by the end of next year, and 1.4% by the end of 2024. As a result, we expect the BoE to reduce the base rate in the coming years although of course there are no guarantees.

Banks and building societies won’t wait for the base rate to fall before deciding what rates they offer. Fixed rate savings look forward – meaning savings providers will look at what the base rate will be in future and reflect this in their current fixed term offers.

And it's a fact that the rates on offer today aren't quite as juicy as a month ago.

The top five one-year fixed rates were averaging 4.47% in the middle of November 2022, compared to 4.27% in the middle of December 2022.

It’s worth bearing in mind that average one-year fixed rates are still at their highest level since 2008. The opportunity for great rates hasn’t gone, but might not be around much longer.

Fixing now could put you ahead of the game if rates start to fall. But remember, fixed term products generally only allow access to your money at maturity and rates could revert back the other way in future years.


Keeping pace with inflation

If fixed rates continue to drop, people in low interest accounts risk having their money significantly eroded by inflation.

Even if inflation drops to 5% in a year's time, savers who want to curb the loss of value on their money need to look at current competitive rates. The top one-year fix available now is 4.32%, but in the latter half of 2022, billions of pounds were sat in accounts bearing little or no interest.

5% inflation means that something which costs £10,000 today will cost £10,500 in a year’s time. People with money in accounts that bear no interest will have lost £500 based on this example.

But it’s not all gloomy, savers prepared to lock their money away for two years could beat some inflation.

If inflation falls under 2% in 2024, the best two-year fixed terms on Active Savings that are currently above 4% could help beat inflation in the second year.

Remember, when you’re working we recommend you should have an emergency savings pot of three to six months’ worth of essential expenses in an easy access account. When you’re retired, this should be one to three years’ worth.

Active Savings offers a wide range of products. From easy access to short and long-term fixed terms, you can easily make sure your money is in the right place to help you secure more flexibility and even beat inflation.

Getting in while you can

The bottom line is that you might not want to wait too long before you consider fixing. It could be time to think about the rate you’re getting.

By relying on customer inertia, big banks can offer savings products that work in their favour and don’t help you keep up with inflation. Smaller banks and building societies compete for your money, offering better rates to keep your money working hard.

But finding better rates doesn’t have to be a chore.

Active Savings lets you view consistently market leading rates from our bank and building society partners, all in one account. And you can pick and switch your savings in a handful of clicks.

Mix and match fixed terms that range from a few months to five years, all alongside your emergency easy access cash pot. There’s no limit to the number of products you can choose. Just remember to focus on when you need access to the cash and making sure it’s right for you. You can’t normally access fixed rates until maturity. Easy access product withdrawals usually take one working day.


This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 915119). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.

Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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