Savers warned over sliding interest rates
Monday, 07 Aug 2006 15:04
Savers have been warned to check they are getting the best value for money
Savers have been warned that they might be worse off than they were a year ago, despite increased interest rates.
Last week the Bank of England raised the UK's underlying interest rate for the first time in a year (
full story), but comparison service Moneyfacts.co.uk points out that while the Bank has taken no action for 12 months, savings providers have been busier.
"Since the start of 2006, well over 40 institutions have cut rates at least once on their variable savings products, in some cases by as much as half a percent," said Rachel Thrusell, head of savings at Moneyfacts.
"Now base rate has increased, many consumers will be looking for increased returns on their savings. However if they have been one of the unfortunate customers to have seen their rates fall over the last seven months, they may in fact be no better off, so the only winner in these cases seems to be the providers."
Currently the average savings rate for a no-notice account is 2.7 per cent and 2.8 per cent for notice accounts, Moneyfacts notes, but far better rates are on offer.
"With best buy rates of at least base rate easily achievable on notice and no notice accounts, ranging as high as 5.0 per cent for Chelsea BS Double Guarantee 80 day notice account and 4.8 per cent for Anglo Irish Easy Access Deposit, consumers are potentially missing out on a significant amount of interest," Ms Thrusell noted.
People would make more than £50 more a year on savings of £5,000 by moving from an average account to an industry-leading one.
But finding the best deal is becoming harder than ever, with more than 500 products on the market and an increasing array of incentives, bonuses, restrictions, and interest calculations muddying the picture.
That said, there is no excuse for staying with an account that pays less than four per cent interest.
"It is well worth consumers shopping around to secure a good home for their hard earned savings," Ms Thrussell said.
"Don’t miss out on the opportunity to increase your returns."
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