What Is a Base Rate Cut?

The base rate, set by the Bank of England, is the interest rate at which commercial banks borrow money. When the base rate is cut, borrowing generally becomes cheaper, but the return on savings tends to decrease.

How Does a Base Rate Cut Affect Borrowing?

• Lower Borrowing Costs: Loans, overdrafts, and credit card interest rates often fall after a base rate cut, reducing monthly payments and the overall cost of borrowing.
• Business Impact: If your business relies on credit, you may find repayments lower, freeing up cash for growth or other expenses.
• Existing Borrowers: If you have a variable rate loan, your interest rate and repayments may decrease. Fixed-rate borrowers remain unaffected until renewal.

How Does a Base Rate Cut Affect Savings?

• Lower Savings Rates: Banks typically reduce the interest paid on savings accounts after a base rate cut, which means you'll earn less on your cash deposits.
• Shop Around: It's more important than ever to compare rates and move your money to accounts offering better returns.

Recommended: Capital On Tap for Business Credit Cards

To help manage business cashflow, the Capital On Tap credit card is a valuable tool:

• Improved Cashflow: Use the card for business expenses to keep cash available for other needs.
• No Interest If Paid in Full: Always pay the balance in full each month to avoid interest charges.
• Rewards & Flexibility: Earn rewards on spending and benefit from flexible credit limits including 1% cashback on all expenditure.
• £75 for signing up: You can earn £75 just for opening the Account using this link here: CAPITAL ON TAP
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Spreading Savings to Reduce Risk

The Financial Services Compensation Scheme (FSCS) protects up to £85,000 per person, per authorised bank. To reduce your exposure to any single bank failure:

• Split Savings: Hold savings across multiple banks, especially if your balances exceed the FSCS limit with any one institution.
• Consider Specialist Banks for better rates: Cynergy Bank, Aldermore Bank, Allica Bank, and the Capital on Tap Account Savings all offer extremely competitive rates for Business Savings and are covered by the FSCS and are accounts we have used here at Kings Oak.

Latest Savings Rates (as of May 2025)

Rates are subject to change-always check the latest before making a deposit.

Final Tips

• Use a business credit card with no monthly fee like Capital On Tap to smooth out cashflow-but always pay in full each month to avoid interest.
• Maximise savings protection by spreading funds across FSCS-covered banks.
• Regularly review savings rates to ensure your money is working as hard as possible for your business.

Stay proactive-base rate cuts can be an opportunity to save on borrowing and optimise your business finances with the right strategy.