The base rate is the rate lenders use to benchmark interest rates. So when the base rate increases, in theory, savings should too, however, this is not always the case.
While some of the improved interest rates on offer may look tempting, with inflation sitting at 10.1 percent, people would still be losing money in real terms.
Jonathan Merry, CEO of Moneyzine explained that the question of where to put one’s money comes up a lot, but typically, contributing to accounts that have tax advantages is the “best place” for cash to be.
He said: “Contributing to accounts that have tax advantages is the best place for cash to be. Tax advantageous accounts such as workplace pensions, individual savings accounts (ISAs), and self-invested personal pensions (SIPPs) is a good place to start.
“It is also a good idea to have a diversified investment portfolio that includes a mix of stocks, bonds, and other assets appropriate for your tolerance of risk.”
READ MORE: Bank launches ‘market leading’ rate across easy access savings account
He highlighted the importance of taking on excessive debt in order to maintain a healthy credit score.
By avoiding taking on debt, Britons can prepare themselves for a financially free future and set themselves up for success.
Mr Merry added: “This can help you qualify for better rates on loans and mortgages, which can save you money in the long run and help preserve your retirement savings.“
Additionally, a savings expert explained that the first rule of financial planning is to hold some money on deposit for cash flow and emergency purposes while investing the majority for the longer term.
The rule of thumb is that investments should be held for an absolute minimum of five years.
People can use easy-access savings accounts to set aside cash for any emergencies or other big, unplanned expenses.
With an easy-access account, savers can make withdrawals and deposits with ease.
The top easy-access accounts are currently being offered by lesser-known challenger banks. Chip and Aldermore are currently offering a savings rate of 3.55 percent making them joint market-leading accounts.
For people who can afford to lock their cash away for longer, SmartSave recently launched market-leading one and two-year fixed-rate savings accounts paying 4.52 percent and 4.58 percent respectively.
Cynergy Bank is offering 4.57 percent fixed for three years, and Tandem 4.6 percent for five years.
These are options people can consider if they want a higher rate but are unsure of investing their money into stocks and shares.
Catriona McInally, savings expert at M&G Wealth suggested, for those who are new to investing and unsure about where to start, they should consider investing in stages, say for example on a monthly basis.
“In that way, they can gradually gain exposure to the markets, but don’t run the risk of investing all their savings on day one and then seeing the value drop immediately if the markets fall straightaway.”
It should be noted that with investing comes risk and Britons could get back less than what they put in.
Another tactic which suits many people is to invest in a well-diversified fund, with a wide range of different asset classes spread around the globe, Ms McInally mentioned.
This can help to protect against investing in the wrong place at the wrong time.
Britons can speak to a financial advisor if they are unsure what to do with their money.