Savings jar now solid competitor to many savings accounts
Average savings rate now 1.48%
Tuesday, 06 Jan 2009 11:30
The average savings rate is now 1.48 per cent, as interest rates are expected to fall further in 2009.
Since the Bank of England's historic cut in interest rates to two per cent in December, 77 per cent of savings providers have passed on their full cut to their customers.
This means 38 per cent of accounts are now paying one per cent or less, based on a balance of £5,000.
The fall in savings rates means many savers are now losing money in real terms on their savings.
Michelle Slade, analyst at
Moneyfacts.co.uk, said: "The impact of high inflation and tax has meant that basic rate tax payers currently need to earn a rate of 5.13 per cent to break even, which is virtually impossible to find in the current market."
She added: "Moneyfacts has been recording savings rates since 1988 and if base rate is cut further this week as predicted we are likely to see the average rate drop to the lowest level ever seen.
“With so many accounts now paying such low rates and the number likely to increase, savers really need to make sure they review the rate they are getting."
Leading the pack on the Moneyfacts best buy tables for internet and easy access accounts are Anglo Irish Bank's Easy Access Deposit Issue 2 at 4.55 per cent, ICICI Bank UK's HiSAVE account at 4.50 per cent, Market Harborough Build Society's onthedot account at 4.15 per cent.
Anglo Irish Bank also has its 7- Day Notice Issue 2 account at 4.65 per cent.
At the bottom of the pile, Bank of Ireland (UK) is paying just 0.001 per cent on its Card Saver account.
Your views
David from Inverness:
I am a retired person in England who regards my 'savings' as my private pension fund. When my wife and I had a mortgage the rate was always in double figures and we made sure that we could afford it; now my fund's interest is falling to zero. This is not a good enough return and I have been looking around the world, via the internet, for a better investment. Brazil for example, or France, to take advantage of the future further falls of the pound against the Euro. I certainly no longer trust the pound. For example, any one with £100,000 in Euros would have seen an increase of value to around £140,000 over the last twelve months.
I do not understand why the interest has been reduced, it can only lead to a loss of capital to Britain and a consequence of a slump, as happened in the last century. The pound has already followed the dollar down to a drastic revaluation that must lead to seriously increased inflation.
Is this all being done to delay the bankruptcy of badly managed banks and a minority of property developers/dealers and stupid mortgage holders who have over-borrowed; and maintain the unrealistically high property prices? I would have thought that it would be better to get the bankruptcies done to get rid of the incompetent, and place their business in more competent institutions and cleverer people.
The removal of the incompetent banks and the drastic reduction of property prices to affordable levels would be a much securer long-term solution. We have had a very long period of continued inflation, it is time for a period of deflation to balance things up and bring about a stable value of our money for future generations. It is grossly irresponsible to allow the continuous inflation of prices that erodes and devalues the value of every one's money and gives future generations very little to build on.
As a person who owns the money I am not satisfied with any interest below 5% pa, and if the interest is not returned rapidly I will take it to where it is more valued, and respected; which will not be the stock market, but rather abroad, or property when it falls far enough. Then the UK lenders will not be able to offer cheap loans because they will not have the money to do so.
If things continue as they are now, then the UK's financial institutions and people's personal savings are going to be nationalized, as were the coal mines, the railways, the car manufacturers, the steel industry, and the defence industry, and where are they now?