The Bank of England raised Bank Rate from 3.75% to 4% on 5 November, its first increase in more than three years. The Monetary Policy Committee voted 8 to 1 for the rise, with one member preferring a larger move to 4.25%. The Bank said higher energy costs have pushed inflation up to 3.5%, and it expects inflation to rise to around 5% by the middle of next year.
Higher Bank Rate does not mean every saver earns more
Savings rates are not directly tied to Bank Rate, so what happens to your money depends on the type of account you hold.
Fixed-rate accounts keep the same rate until the term ends. Tracker accounts follow Bank Rate, although the change can take effect on a later date set out in the account terms. Most easy access and other variable accounts are up to each provider, which can choose whether, when and by how much to raise its rate.
Some providers moved within hours of the announcement. Others have set dates a few weeks ahead: Nationwide said its variable savings rates will rise by up to 0.25 percentage points from 1 December, and Santander said accounts linked to Bank Rate will rise on 2 December.
A wide gap between average and best rates
According to Moneyfacts, a typical easy access account paid about 2.56% at the start of November, while some of the most flexible accounts from the big banks paid an average of just 1.16%. The most competitive easy access rates were above 4%, and many market-leading fixed bonds were paying over 5%.
What it means for savers
It may be worth checking the rate you are actually earning, rather than assuming it has gone up. If you have a variable account, look out for a notice from your provider about any change and when it applies. Headline rates often include short-term bonuses or conditions, so it helps to read the terms before comparing.
Higher rates also mean more savers may earn enough interest to go over their personal savings allowance. Tax rates on savings interest held outside an ISA are due to rise by four percentage points from April 2027.
Sources: Bank of England, Moneyfacts, Nationwide, Santander
This article is general information only and is not financial advice. Savings rates can change at any time. If you are unsure what is right for you, consider speaking to a regulated financial adviser.