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Savings raids shunned as inflation takes its toll

Savings raids shunned as inflation takes its toll

Category: Savings

Updated: 16/05/2011
First Published: 16/05/2011

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 It is now over 6 months old so the content may be out of date.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 are shying away from plunging into their savings as they admit that they are concerned about the impact of inflation.

The rate of inflation currently stands at 4%, twice the Government's target, and savers have the Bank of England's warning that it could hit 5% this year ringing in their ears.

More than half (52%) of Britons that regularly save money are concerned about the impact inflation is having on their funds, according to BM Savings.

The number of people taking the proverbial hammer to their piggy banks fell to less than four in ten (37%) over the past three months.

Those living in the East of England (28%) and Scotland (29%) have shied away the most from making a raid on their savings.

But with the challenging economic conditions stubbornly sticking around, people are finding it harder to put money away every month.

Almost half (48%) of Britons have not saved as much as a single penny in the last three months.

"As we head into summer, savers have reduced the amount they have raided from their savings account," conceded John Bianco, head of products at BM Savings.

Savers worried about the impact inflation is having on their money will have been boosted by last week's news that National Savings & Investments (NS&I) has reintroduced its popular index-linked bonds.

The accounts grow above inflation (Retail Prices Index + 0.5%) but savers have been warned to act fast as NS&I can only accept a certain amount in deposits.

The certificates proved so popular last year that they were shut to all new applicants.

They're also an effective way of making sure you're not tempted to raid your savings as no returns are paid if you cash in before a year is up.

For other notice accounts, start your search at the Best Buy tables.

Find the best savings rates for you - Compare savings accounts

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 Any products featured may be withdrawn by their provider or changed at any time.