Inflation wipes out savings interest
Michelle Slade, analyst at Moneyfacts.co.uk, comments:
“A combination of inflation at 5.2% and tax means that savers will now find it near impossible to earn interest on their money.
“A standard rate tax payer needs to find an account paying 6.50%, while a high rate tax payer needs to earn a rate of 8.63%.
“For higher rate tax payers there is no account on the market paying such a rate. Standard rate tax payers only have access to a couple of accounts and then only with restrictions.
“As yet the 0.50% base rate cut has not been passed on by providers. Therefore in the coming weeks, savers are going to struggle even more to find an account.
Account Type |
Provider |
Account |
Rate |
Other |
No Notice |
Britannia BS |
Homesaver |
7.00% |
Withdrawals on 90 day loss unless used for Britannia mortgage. |
Chelsea BS |
Tracker Bond 1st Issue |
6.60% |
30 day loss on all withdrawals. |
|
Notice |
Secure Trust Bank |
60 Day Notice |
6.57% |
Includes 1% bonus for 6 months. 3 withdrawals pa. Earlier access on 60 day loss. |
Whiteaway Laidlaw Bank |
60 Day Bonus |
6.56% |
Includes 1% bonus for 12 months. Earlier access on 14 day loss. |
|
Cash ISA |
Abbey |
Super ISA (Issue 3) |
7.75% |
Reverts to Direct ISA Issue 2 after 13 months. Cash card available. Equal amount must be invested in a Guaranteed Growth Plan at same time (min £1.5K). |
NatWest |
Cash ISA (Transfers In) |
6.51% |
Transfers in only (from outside RBS group). Inc 2.00% bonus for 12 months. Higher rates paid on larger balances |
|
Fixed Rate Bonds |
ICICI Bank UK |
HiSAVE Fixed Rate (without early access) |
7.20% |
1 Year Bond |
Anglo Irish Bank |
1 Year Bond |
7.05% |
|
|
Source: Moneyfacts.co.uk 14.10.08 |
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“Savers had been benefitting from the credit crunch, but now the tables have turned. The Bank of England cut base rate as part of a move to kick start the housing market, but it has come at the expense of savers as inflation jumps to its highest level in six years.
“Until inflation is brought back under control, savers need to make the best of a bad situation. By ensuring that they achieve the best rate possible for their money, they can limit the effect that inflation will have on depleting the value of their money.”
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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