Consumers will soon feel the effects of today's decision by the Bank of England to cut interest rates to 5.5%, a drop of 0.25%. After a series of rate hikes, this is the first fall since August 2005.
Yet, while the media peddles that this is simply "bad for savers, good for borrowers", the consequences for consumers are more complex and unique to individual circumstances, says Martin Lewis of MoneySavingExpert.com.
"This rate drop doesn't simply mean you'll earn less on your savings or debts will cost you more. For anyone with fixed rate mortgages, savings or loans, there will be no effect at all. If you've a tracker mortgage, payments will definitely fall; while they should with a discount mortgage too, but there are no guarantees. Finally, savers with standard instant access accounts can expect their rates to drop, so monitor yours and if it does, switch to the new best once the market settles, in a couple of weeks."
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