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Rate cut 'assaults savers'
Jonathan Prynn10 Feb 2009
Savers have been hit by a cataclysmic drop in interest rates since the autumn with returns on some accounts plummeting 90 per cent in three months.
The average rate on branch-based savings accounts fell to an all-time low of 0.29 per cent in January, Bank of England figures showed. As recently as October the figure was 3.03 per cent.
Banks and building societies have been forced to cut the returns they offer savers as the Bank has slashed its base rate to boost the economy.
A customer with £10,000 in an account will see their after-tax monthly income fall from £20.05 to £1.93 in what was described by the Building Societies Association as "an assault on savers".
The average tax-free ISA now offers interest of just 1.38 per cent, a far cry from 5.06 per cent of 12 months ago.
Returns on fixed-rate bonds have hit a record 2.35 per cent low.
Reader views (3)
Premium bonds are a complete waste of time at the moment due to the low interest rate applied to the fund. I withdrew my 30k as I wasn't prepared to lend my money to brown for nothing.
- Chris, Rochester, 11/02/2009 08:16
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The banks are quick to pass on the interest rate cut to savers but has anyone noticed a cut in loan rates? The cheapest, I could find at the weekend was 7.9%. How can they get away with it?
- Bb, S.E London, 11/02/2009 07:52
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Almost time to withdraw from the Banks and put the money into Premium Bonds, only a pittance in interest to lose but psssibly a win or three to gain.
- Len Welsh, Grays, England., 10/02/2009 17:48
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