A party for savers but here comes a pooper

By Steve Lodge personal finance editor

Friday's rise in the base interest rate, albeit a mere 0.25 per cent, is yet more good news for savers in a week when millions were already celebrating thanks to the higher-than-expected price at which Halifax shares joined the stock market. But savers should beware of becoming blase.

Savings account rates may be set for a third rise this year, but that is from an historic low. After the latest round of increases we are still only talking respectable rather than resplendent. In addition, too many of the banks and societies are still giving their best deals on new accounts, rather than to their long-suffering customers. So savers have to be prepared to switch.

It is also important to bear in mind that savings rates do not rise in isolation. The obvious downside is higher mortgage rates, but even if you are not a borrower, further rises could still hurt you.

Higher interest rates are normally bad news for shares, thanks to the simple logic that they increase the attractions of holding cash and therefore reduce the relative attractions of holding shares. The latest base-rate rise was shrugged off by the stock market on Friday but further increases may be more damaging. Given that the stock market already looks precariously high, and shares in financial companies are arguably the most over-inflated, windfall recipients could yet be disappointed by tumbles in the value of their handouts.

The party may well continue a while, however. People whose shares are held in the Halifax Shareholder Account can sell for free through the Halifax if they return the relevant form by Wednesday. However, if you don't have anything more in mind than keeping the cash proceeds on deposit then over the longer term you should be better off sticking with the shares. And all the signs are that Norwich Union, the next windfall, will join the stock market on Monday week at a bonanza price. So if you are due the free shares and have the money to buy more at a discount, you almost certainly should go for them - albeit not with your life's savings. And if you haven't sent off your application this is your last chance: the offer closes on 10 June.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
As rising house prices push up demand for renting, so tenants are having to dig deeper than ever

Starter home initiative is urgently needed as rents go through the roof

Rents in England and Wales rose by 1.9 per cent in July to an average of £804

Peer-to-peer lending rates put Nisas to shame

The returns from P2P providers look more attractive than ever

Questions of Cash: Log-in problems turned eDreams booking into one-way ticket to nowhere

The company failed to provide our reader's flight ticket - or a refund

Hot property: business has been booming in estate agents this month, even though it’s the height of the summer holiday season

Heat rises for mortgage deals as UK homeowners sense a rate hike coming

The housing market should go quiet in August but instead people have been acting like cheap loans won't last. Do we really have to rush, asks Simon Read
Phones have now overtaken personal computers as the most used way of accessing the internet

Who you gonna call? The Complaints Busters

Unhappy customers have been given their own Ombudsman to help fight for them.

Undergraduates are being tempted with freebies by banks

Students should give freebies a wide berth and focus instead on cheap borrowing

An interest-free loan far outweighs the value of any of the bank's incentives

The Spanish carrier changed a reader's flight from Madrid – to a time before she was due to land

Questions of Cash: 'A connecting Vueling flight was cancelled and all my travel costs were left hanging in the air'

Our reader encountered problems when flying from London to Ibiza in May to take part in a charity ride

Complacency about rising rates could prove to be costly

Interest rates stay at 0.5% for now - but don't wait to get a better deal on your savings and mortgage

The years of ultra-low rates are coming to an end

The elderly are being targeted by fraudsters with postal scams such as fake prize draws

Fraudsters are bombarding older people with dangerous pension scams: here we reveal the warning signs

Many people are being repeatedly targeted by crooked schemes

Football and credit cards aren't always a good match

A football club-branded credit card could end up being a financial own goal

It may be a great talking point when you get your football club plastic out in front of your mates, but these deals aren't the best option for all fans

Switching current accounts: Five things you need to know about getting the best deal

Banks are boosting their profits by millions of pounds through consumer confusion

A reader's baggage was damaged at Madrid-Barajas airport, and a refund is still awaited

Questions of Cash: Iberia damaged my suitcase, told me to buy a new one - and then lost the cheque in the post

The customer purchased a replacement for €89 but has not received the refund over three months later

Swim against the tide: a country in the midst of a financial crisis, like Greece, may offer investment opportunities

History tells investors to keep their nerve when headlines scream 'crisis'

Swim against the tide: a country in the midst of a financial crisis, like Greece, may offer investment opportunities

Writing a will: How to ensure that your legacy is honoured

Last week appeal judges said a mother had been wrong to leave her daughter nothing. Simon Read asks what the rest of us have to do to avoid the same fate
Comparing current accounts to find the best value is now almost impossible

High street banks 'making millions' by confusing customers out of switching current accounts

Millions lose out because they don't understand the charges and fees on bank accounts

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

    £15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Loan Underwriter

    £18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

    Recruitment Genius: Collections Agent

    £18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive + incentives + uncapped comms: SThree:...

    Day In a Page

    The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

    The Silk Roads that trace civilisation

    Long before the West rose to power, Asian pathways were connecting peoples and places
    House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

    The honours that shame Britain

    Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
    When it comes to street harassment, we need to talk about race

    'When it comes to street harassment, we need to talk about race'

    Why are black men living the stereotypes and why are we letting them get away with it?
    International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

    International Tap Festival comes to the UK

    Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
    War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

    Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

    Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
    Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

    'A subversive brothel keeper and Communist'

    Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
    Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

    BBC heads to the Californian coast

    The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
    Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

    Victorian fraudster who shook the Bank of England

    Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
    Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

    Car hacking scandal

    Security designed to stop thieves hot-wiring almost every modern motor has been cracked
    10 best placemats

    Take your seat: 10 best placemats

    Protect your table and dine in style with a bold new accessory
    Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

    Cook not the only one to be caught in The Oval mindwarp

    Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
    Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

    Can Benitez get the best out of Bale?

    Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
    Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

    Beijing witnesses new stage in the Jess and Kat rivalry

    The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
    Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

    Jeremy Corbyn interview: A shrewd operator desperate for power

    His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
    Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

    Isis executes Palmyra antiquities chief

    Robert Fisk on the defender of the ancient city's past who was killed for protecting its future