21 Nov 2024

Short-term savers suffer

The Bank of England base rate has remained at an-all time low of 0.50% for three years, the longest hold for 60 years.

Savers have continued to suffer over the last three years with base rate so low, and inflation still above the Government’s 2% target.

While there are many savings accounts offering an introductory bonus, after this expires the accounts can pay less than base rate, so reviewing their competitiveness is vital.

	March 2009	Today	Difference
Average easy access	0.83%	1.00%	+0.17%
Average notice	1.09%	1.55%	+0.46%
Average Cash ISA	1.99%	1.91%	-0.08%
Average 1 year bond	2.78%	2.75%	-0.03%
Average 2 year bond	2.83%	3.36%	+0.53%
Average 3 year bond	2.98%	3.42%	+0.44%
Average 4 year bond	2.89%	3.80%	+0.91%
Average 5 year bond	2.86%	3.95%	+1.09%
Source: Moneyfacts.co.uk 29.03.12

Rachel Springall, spokesperson for Moneyfacts.co.uk, said:

“It will come as no surprise that savers have suffered the most with base rate at such a low level.

“The surprise will be that despite no base rate change in the last three years, savings rates are rising, albeit slowly.

“Many feel that the majority of savings accounts pay abysmal rates, with several accounts offering less than base rate. The only way for savers to keep out of the savings interest trap is to review their accounts at least annually.

“One-year fixed rate bonds and instant access accounts have been the meanest regarding interest payment with little or no improvement. One-year fixed deposits are paying less than what was offered three years ago.

“Fixed long-term bonds continue to offer the highest interest on the market as providers focus on offering the best deals to savers who are committed to locking their money away.

“Building societies are continuing to offer some of the best savings deals in the market.

“Savers need not sit on the sidelines hoping for a change in fortune; all they need to do is join in the action by reviewing their accounts.”

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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