Saturday, 6 February 2010

Wealth workout: can savers fight back in battle for better rates?

Wealth workout: can savers fight back in battle for better rates?

For the 11th month in a row the Bank of England has voted to keep the Bank Rate on hold at 0.5pc, a decision that continues to cripple savers.

By Michelle Slade of
Published: 3:53PM GMT 04 Feb 2010

So much so that, in the year to February 2010 on a £10,000 balance, savers in an average-paying easy-access account earned just £76 in interest, over four times less than they would have earned in the year to February 2009.

The average interest rate for a £1,000 balance in an instant or easy access account is currently 0.88pc, which is well below the latest inflation rate (2.9pc for the Consumer Prices Index and 2.4pc for the Retail Prices Index), according to Defaqto, the analyst. Some accounts pay as little as 0.01pc whereas the Coventry’s Building Society’s easy access 1st Class Postal pays 3.15pc on balances of £1,000 or more.

Those who have been hit hardest by such a significant decline are those who rely on their savings to supplement their income, many of whom are pensioners, who either had to make sweeping lifestyle changes or have eroded their capital to get by. However, disgruntled savers are fighting back with the launch of the action group Save Our Savers, which is putting pressure on the Government and policy-makers for a fairer deal.

The calls for a better deal for savers have so far failed to reach the ears of the providers as the trend for cutting rates, particularly on fixed-rate bonds, continued this week. The only positive news remains for those looking to invest their Isa allowance, where the average rate has increased from 2.05pc to 2.12pc since last month, with further rises expected in the next few weeks as Isa season really takes hold.

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