The  Bank of England’s Monetary Policy Committee cut the base rate from 4.25% down to 4%. This base rate plays a major role in how banks and building societies calculate their interest rates on a range of products, indirectly affecting everyone from savers to homeowners and credit card holders.

For cuts like this, financial institutions usually pass on the changes to their savings customers first, lowering the interest rates on savings accounts. But credit card interest rates are likely to drop too soon after. John Webb, Consumer Expert at Experian explained this makes it the perfect time for people to slash away at their debts by switching.

The expert said: “This reduction could ease the financial burden on households by lowering borrowing costs. If you have a credit card with interest, you could save an average of £1,391.69 annually by switching to a balance transfer card.

“It’s a good idea to regularly review your borrowing and take advantage of eligibility checks to see if you can lower the cost of your existing debt.

“If you’ve got multiple debts with high interest, you might find consolidating a good option, especially with more favourable rates available.”

Mr Webb also noted that people on variable-rate mortgages or loans might get “some relief” in the coming months thanks to the base rate drop, but urged savers to act: “To help secure better returns, it might be worth exploring fixed rate savings accounts.”

Alastair Douglas, CEO of TotallyMoney added: “Over the past year, we’ve seen greater competition in the market, with options increasing, and balance transfer and purchase card lengths getting longer. And this is better for customers, and better for the economy, as people’s spending power increases.

Mr Douglas continued: “Further cuts will help stimulate the economy, by reducing the cost of borrowing, and driving investment. Fintech has felt the of brunt higher rates, but with more money moving into the sector, and new technologies driving innovation, we should see faster improvements in both the financial services and customer outcomes.”

Mr Webb highlighted that there is help for people struggling under the burden of their debts or worried about repayments and their credit scores.

He said: “It’s the right time to speak to a free debt advice service like National Debtline or Christians Against Poverty.

“They can provide valuable guidance and assistance tailored to your situation, helping you navigate these changes and get you back on top of your finances.”