Interest Rates

Rising Interest Rates: Good for Savers, Bad for Borrowers — What To Do

April 2026 · 5 min read · QuidCast Guides

⚠️ Not financial advice. This guide is educational only. Investments can fall as well as rise. Always consult an FCA-authorised adviser before making financial decisions.

Quick answer

A high base rate is the best environment for cash savers in 15 years and the toughest for borrowers in a generation. Savers should move money out of current accounts, compare regularly, consider fixing before expected cuts, and use their ISA allowance. Borrowers should prioritise clearing expensive debt.

Today's elevated BOE base rate is one of the best environments for cash savers in 15 years — and the most challenging for borrowers in a generation. Here's how to position yourself.

For Savers

Don't leave money in your current account. Banks pay virtually nothing while lending it out at 5–7%.
Compare regularly. The best rate today may not be best in 3 months.
Consider locking in. With rate cuts expected in late 2026, fixing your savings rate now secures today's higher returns for longer.
Use your ISA allowance. At 4.75%, a Cash ISA pays £950/year on £20,000 — entirely tax-free.

For Borrowers

Credit card rates are 20–30% regardless of base rate. Mortgage rates have risen sharply — the average 2-year fix went from ~2% in 2021 to over 5% by 2024, now settling ~4–4.5% as cuts are priced in.

Key TakeawayPriority order in a high-rate environment: pay off expensive debt first, build emergency fund second, maximise savings returns, then invest for the long term.

The Window

Markets price in gradual BOE cuts through 2026–2027. When those arrive, savings rates will fall. The next 12–18 months are a window to lock in competitive returns.

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Frequently asked questions

What should savers do when interest rates are high?

Don't leave money in a current account earning nothing, compare rates regularly, and consider locking in a fixed rate before expected cuts. Using your Cash ISA allowance helps too — at 4.75%, £20,000 earns around £950 a year tax-free.

Are high interest rates bad for borrowers?

Generally yes. Mortgage rates rose from around 2% in 2021 to over 5% by 2024 before settling around 4–4.5%, and credit card rates sit at 20–30% regardless of the base rate, so clearing expensive debt becomes a priority.

Should I fix my savings rate now?

With rate cuts expected later in 2026, fixing a savings rate can lock in today's higher returns for longer. Whether it suits you depends on whether you can leave the money untouched for the fixed term.