31 Dec 2024

Cost of living still a burden to savers

Inflation figures released today show the Consumer Prices Index (CPI) fell during September, from 2.5% to 2.2%.

To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 2.75% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 3.66%.

Today there is a choice of 266 standard savings accounts and ISAs that basic rate taxpayers can choose from to negate the impact of tax and inflation and 150 for higher rate taxpayers.

The impact of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £8,902 today.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:

“Although today’s fall in inflation is welcomed, it’s hardly cause to celebrate. The small rise in spending power will not suddenly make the nation’s savings accounts profitable for the majority of savers.

“The sad truth is that after the taxman has taken his share of any interest paid on savings accounts, and inflation has reduced spending power further, what is left is still pretty poor.

“Spending power is eroding because the average savings account simply does not keep pace with inflation.

“Inflation may not be on the radar of banks when setting the amount of interest paid on savings accounts, but perhaps it should be.

“Today there are 952 savings accounts on the market, but only 266 (5 no-notice, 17 notice, 98 fixed and 146 ISAs) accounts that negate the effects of tax and inflation.

“Savers need to be vigilant and take advantage of tax breaks such as ISAs and if they can, lock their money away for a fixed period to ensure better rates.”

Cash ISAs
Provider	Account	Rate	Notes
Coventry BS	60 Day Notice ISA	3.25%	Rate includes 0.50% bonus for 12 months
Post Office®	Premier Cash ISA	3.01%	Rate includes 1.26% bonus for 18 months
Cheshire BS	Direct Cash ISA (Issue 4)	3.00%	Rate includes 2.00% bonus until 31.01.2014
Market Harborough BS	Flexible ISA	3.00%	Rate includes 0.75% bonus for 12 months
Teachers BS	Cash ISA Reward	3.00%	Rate includes 1.25% bonus for 12 months
Source Moneyfacts.co.uk Compiled 16.10.12

Fixed Cash ISAs
Provider	Account	Rate	Notes
United Trust Bank	5 Year Fixed Cash ISA (Transfers in only)	4.00%
Halifax	ISA Saver Fixed	3.60%	Earlier access on closure only on 365 day loss of interest.Can apply online.
Halifax	ISA Saver Fixed	3.55%	Earlier access on closure only on 320 day loss of interest.Can apply online.
United Trust Bank	3 Year Fixed Cash ISA (Transfers in only)	3.55%
Julian Hodge Bank	5 Year Fixed ISA	3.50%	Earlier access on closure only subject to penalty.
Source Moneyfacts.co.uk Compiled 16.10.12

5 Year Fixed Rate Bonds
Provider	Account	Rate	Notes
United Trust Bank	5 Year Fixed Deposit	4.00%
Triodos Bank	Triodos Five Year Ethical Savings Bond	3.75%
Vanquis Bank	Vanquis Bank High Yield	3.71%
BM Savings	5 Year Fixed Rate	3.50%	Earlier access subject to penalty, depending on term outstanding: up to 5 years - 365 days, 4 years - 320 days, 3 years - 270 days, 2 years - 180 days, 1 year or less - 90 days.
Julian Hodge Bank	Capital Millennium Bond	3.50%
Source Moneyfacts.co.uk Compiled 16.10.12

No Notice Accounts
Provider	Account	Rate	Notes
AA	AA Internet Extra (Issue 4)	2.80%	Via nominated account. Rate includes 2.30% bonus for 12 monthsInitial deposit by cheque from nominated account.
SAGA	Saga Telephone Saver Issue 6	2.75%	All withdrawals via nominated account.Rate includes 2.25% bonus for 12 months
Derbyshire BS	Derbyshire NetSaver Issue 6	2.75%	Withdrawals via nominated account. Rate includes 1.75% bonus until 28.02.2014Initial deposit by cheque.
Source Moneyfacts.co.uk Compiled 16.10.12

Notice Accounts
Provider	Account	Rate	Notes
Shawbrook Bank	120 Day Notice Personal Savings Account Issue 2	3.30%	No cash transactions.
Shawbrook Bank	95 Day Notice Personal Savings Account Issue 2	3.20%	No cash transactions.
Aldermore	Postal 180 Day Notice	3.20%	New money to the Institution (at least 50% must be new funds. )Earlier access on 180 day loss of interest. Withdrawals by cheque.
Post Office®	90 Day Notice	3.10%	Withdrawals via nominated account.
Leeds BS	10th Anniversary 90 Day Online Notice	3.10%	Earlier access at Bank's discretion subject to 2.00% charge.
Source Moneyfacts.co.uk Compiled 16.10.12

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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Cost of living still a burden to savers

Cash ISAs

Fixed Cash ISAs

5 Year Fixed Rate Bonds

No Notice Accounts

Notice Accounts