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Disappointing year for savers

Disappointing year for savers

Category: Savings

Updated: 31/12/2009
First Published: 30/12/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Savers will be hoping the beginning of a new year will bring a change of fortune, as rates have dropped almost across the board during 2009.

Consumers reluctant to lock their money away for a concerted period of time have suffered with all short term accounts paying reduced rates compared with the beginning of 2009.

Easy access accounts started the year – when the Bank of England base rate was two per cent – paying an average rate of 1.48 per cent. That figure has dropped to 0.80 per cent – a fall of 0.68 per cent.

Notice accounts have also taken a hit, with average rates falling from 1.76 per cent to 1.14 per cent, while the average return on the ever popular ISA has contracted from 2.58 per cent.

Furthermore, a saver looking to invest their cash in a one year bond at the beginning of the year could have expected a rate of 3.62 per cent. During the year, that has fallen to 3.10 per cent.

"Savers have had a dismal year as rates have fallen to record lows. Those that rely on the income from their savings to supplement their income, such as pensioners, have been hardest hit, with many having to make changes to their lifestyle as a result," commented Michelle Slade, spokesperson for Moneyfacts.co.uk.

By contrast, the average rate of interest paid on three year bonds has increased during the year, from 3.46 per cent to 4.10 per cent. Savers prepared to tie their money in for five years have seen average rates jump from 3.33 per cent to 4.63 per cent – up by 1.30 per cent.

"Only savers prepared to lock money away in fixed rate products have really benefitted, where the demand for savers' money has pushed rates ever higher throughout the year."

The total number of products in the savings market has increased from 2,065 to 2,285 during 2009.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.