The Bank of England’s interest rate committee meets on 5 November to decide whether it needs to inject more money into the economy.

The outlook has deteriorated since they last got together in September, with Covid-19 restrictions becoming more widespread, and the Government looking to wean the labour market off financial support. But with rates at 0.1%, there’s not much room for manoeuvre.

More quantitative easing will probably be the first port of call for the Bank of England, but it is noticeably warming markets up to the idea of negative interest rates.

It’s extremely unlikely that banks would charge customers on their deposits if the main Bank of England rate turned negative. But it may mean interest payments dry up even further, remarkable as that     may sound.

The average interest rate on cash deposits currently stands at just 0.1%, and it’s barely climbed above 1% in the last 10 years. Even the popular NS&I savings platform is cutting the interest rate on its Direct Saver from 1% to 0.15% in November.

While inflation is also low, with CPI at 0.5%, these accounts are still losing their buying power. The economic picture is challenging, so it looks like near-zero rates are here to stay for the foreseeable future.

STEPS TO TAKE

Savers can’t pick the economy up by its bootstraps, or influence the Bank of England, but there are a few things they can do to make their life a lot better. First is to think about what savings they need in the short term, up to five years, and what money they can afford to tuck away for five to 10 years or longer.

Short-term rainy-day savings should go into cash, because the market can be too risky if you don’t give it time to deliver.

Your current account is likely to offer a poor rate, if it pays interest at all, so you should make sure you don’t keep any more than you need to in there.

Instead find a dedicated savings account and shop around for the best rate. Now that’s unlikely to set your pulse racing, but it’s a tangible improvement you can make.

It also pays to consider locking some of your cash away in a fixed-term savings product, because you’ll likely get a higher interest rate.

Indeed by taking a portfolio approach to your cash, having some in instant access, some locked up for six months to a year, and some locked up for longer, you can harvest better rates while maintaining the flexibility you need.

COMPENSATION LIMITS

It also pays to be aware of the £85,000 limit on compensation covered by the Financial Services Compensation Scheme for each bank with whom you hold an account. UK banks are heavily regulated and have lots of checks in place to make sure they are solvent, but in the unlikely event your bank goes bust, the FSCS will only compensate you up £85,000.

If you’re lucky enough to have more than this amount sitting in cash, it makes sense to spread your eggs between numerous different institutions, just in case.

FINDING TOP RATES

A recent addition to the UK savings landscape is the emergence of new cash supermarkets, also known as cash savings hubs.

These portals give you access to savings accounts from various banks in one place. AJ Bell has recently launched a new cash hub service and others on the market include Raisin and Flagstone.

It’s a way in which you can choose between competitive savings accounts as these services should offer some of the best rates on the market.

Once you’ve opened up an account with the hub provider and held your money in the requested savings account either for a fixed term or given the required notice, you can then switch to another savings provider via the cash hub without any hassle.

LONGER TERM STRATEGY

While savers should try to squeeze whatever gains they can get out of those short-term savings, they should also give some thought to the money  they can afford to put away for longer.

This is where the stock market comes in. While returns can swing wildly year to year, over the long term the stock market can be a reliable performer. You can even smooth out some of the volatility by investing monthly, thereby buying in through the peaks and                  the troughs.

Where possible, it can also pay to wrap your investments within an ISA, so you don’t have to pay capital gains or income tax. In a low growth, zero-interest rate environment, every little helps.

DISCLAIMER: AJ Bell is the owner of Shares magazine. Editor Daniel Coatsworth owns shares in AJ Bell

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