Savers hit by biggest losses in a decade as prices rise at fastest rate for more than nine years
- Average easy-access rate has fallen to an all-time low of 0.09 per cent
- Inflation rose to 3.2 per cent in August and is likely to rise above 4 per cent
- Inflation means average savers are losing out to the tune of 3.11 per cent
Savers are suffering their worst losses in a decade.
Prices are rising at their fastest rate for more than nine years. Yet the average rate paid on easy-access accounts has fallen to an all-time low of 0.09 per cent, Bank of England figures show.
It means the gap between price rises and what you can earn on savings is at its widest for ten years.
The average rate paid on easy-access accounts has fallen to an all time low of 0.09 per cent, Bank of England figures show
Inflation burst through the 3 per cent barrier in August, hitting 3.2 per cent a year, 60 per cent up from 2 per cent in July.
Worse still, the Bank last week warned inflation is likely to rise to more than 4 per cent. There is not a savings account that goes anywhere near matching these rates.
As a result, savers are seeing the value of their money eroded. After taking into account the average 0.09 per cent interest paid on easy-access accounts, inflation means savers are losing out to the tune of 3.11 per cent.
Every £1,000 saved a year ago is now worth just £969. At 4.2 per cent inflation your £1,000 will devalue to £958. The situation is far worse than a year ago when accidental savers put aside billions during the pandemic.
The average rate on easy-access accounts was only a fraction higher than today at 0.1 per cent. But the rise in the cost of living was 0.2 per cent.
Experts are urging savers to squeeze all they can out of rainy-day cash to lessen the blow of rising inflation.
The amount in easy-access accounts has jumped by 24 per cent to £958billion since March 2020.
We also have £246billion in current accounts, paying no interest, up 34 per cent over the past 18 months.
Leaving your nest egg with a big bank is your worst option — most pay only 0.01 per cent on easy-access accounts.
With inflation at 3.2 per cent, it means you would lose as much as £319 a year on each £10,000 after taking £1 interest into account.
But by switching to a smaller bank or building society, you could earn as much as 0.65 per cent.
There are now 14 accounts paying 0.5 per cent or more. Top deals include Marcus by Goldman Sachs, Charter Savings Bank and Saga, which raised rates to 0.6 per cent last week, while Ford Money and Aldermore Bank went up to 0.5 per cent. Other leaders include Investec at 0.58 per cent, and Tandem’s 0.55 per cent.
Others come with restrictions but may be suitable for part of your savings. Family BS pays the highest at 0.65 per cent but you can add money only until November 5.
Aldermore pays 0.6 per cent on its double access account, but limits you to two withdrawals.
Coventry BS’s limited access online account pays 0.55 per cent or 0.5 per cent on its branch or postal-based version and allows six withdrawals.
The society also has a new four access saver at 0.65 per cent, allowing four free withdrawals a year.
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