Interest rates

The UK Bank Base Rate was reduced last week at February’s meeting to 4.50%. The Bank of England thought that interest rates would continue to come down and with UK growth rates for this year cut by a half, expectations were for several more interest rate cuts this year.

You should check the rate on any savings accounts you have with high street banks, as typically these remain far lower than market rates. While having a small amount in these accounts for convenience may be fine, you could be losing out on interest if you have more substantial deposits with them.

Looking at rates at the time of writing (on February 4) an indicative sample of the rates you can secure at present are as follows:

Source: Moneyfacts.co.uk 04.02.25

We have not included institutions in the table above as rates change quickly. If you wish to review the interest rates you are getting currently, please do speak to your financial planner.

Cash management services

For those holding substantial funds on deposits whether personally, by a company, a pension fund or a Trust, a cash management service may be worth considering. They offer potentially higher interest with deposits fully protected and much simpler administration than where accounts are held directly with institutions.

These are essentially platforms to help manage cash deposits and allow you to easily switch between different deposit accounts without having to go through the arduous account opening process each time.

For those with a larger short-term deposit or entities such as Trusts, pension funds and companies where opening accounts is more difficult, using a cash management service can greatly simplify the ongoing administration and makes it far easier to ensure the overall rate of interest remains competitive.

When you are dealing with a large sum of money, while the interest rate is important, so too is ensuring the deposit is protected by the Financial Services Compensation Scheme (FSCS) in the event an institution becomes insolvent. For individuals, this is £85,000 (£170,000 for a couple) and for entities like a Trust or some companies, this is £85,000 per institution. Opening multiple accounts to ensure the funds remain fully protected by the FSCS can be extremely onerous especially for Trusts and companies.

For our chosen cash management service, while it will be necessary to carry out the normal money laundering checks up front, once identification is provided, multiple accounts can then be opened from the service.

Rates are variable and will change over time but below is an indication of some of the rates available for individuals, companies, Trusts and pensions.

Source: Insignis Cash 28.01.25

If you would like to review the interest rates you are getting currently or want to know more about our cash management service, please speak to your financial planner.