- Less than a quarter of accounts pay enough interest to fight off inflation*
- Easy access accounts hardest hit
- Outlook even bleaker for higher tax rate payers
Inflation rates have increased for the first time since February this year; moneysupermarket.com warns savers to make sure their savings work hard for them by checking their savings products' rates do not get eaten away by inflation.
Basic rate tax payers will need an interest rate of at least 1.875 per cent to gain benefit in real terms from their savings, increasing to 2.5 per cent for higher rate tax payers, yet research by moneysupermarket.com shows this is harder to achieve than it would seem.
Easy access accounts have been hit the hardest; only forty out of over 269 (15 per cent) easy access accounts are paying at least the 1.875 per cent that is required by savers to keep up with inflation.
Kevin Mountford, head of banking at moneysupermarket.com, said: "Regular savings accounts are looking more attractive at the moment, with over half of the products available set to give customers a real return on their cash. Cash ISAs are also offering good value for money at the moment but, in all, savers need to be wary that almost three quarters of products will fail to give a true return to savers."
The news gets worse for high rate taxpayers, with only seven per cent of easy access accounts able to beat inflation at its current level, and this lowers to a mere five per cent of cash ISAs.
Kevin Mountford added: "We expected to see saving rates creep down before the end of the year, but if rates go any lower then savers will find it almost impossible to beat inflation. Anyone taking out a new deal should look for the highest return on terms that suit them, otherwise as the economy stabilises we might see inflation creep up even more and bite away at those interest rates. I would urge savers to be more attentive than ever to ensure they get the best return possible."
- Ends -
Notes to editors:
|
|
Easy Access £1,000 |
Notice £5,000 |
Over 50's £2,500 |
Regular Saver £20 |
Cash ISA £3,600 |
|
Number of Accounts |
269 |
117 |
35 |
43 |
92 |
|
Average Rate |
0.74% |
1.09% |
1.30% |
2.52% |
1.34% |
|
Number of Accounts of Value to Basic Saver |
40 |
30 |
11 |
25 |
29 |
|
Number of Accounts of Value to Basic Saver as a percentage |
14.9% |
25.6% |
31.4% |
58.1% |
31.5% |
|
Number of Accounts of Value to Higher Tax Saver |
19 |
18 |
1 |
21 |
5 |
|
Number of Accounts of Value to Higher Tax Saver as a percentage |
7.1% |
15.4% |
2.9% |
48.8% |
5.4% |
*total number of value to basic accounts divided by total number of accounts in table above for basic tax rate payers = 135/556 =24.3%
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