Warning to savers
Nov 18 2009 By The Journal
ONLY one in five savings accounts is paying interest rates which give consumers a real return on their money, research has revealed.
THE key Consumer Prices Index measure of inflation rose to 1.5% last month, up from 1.1% in September.
The increase means basic rate taxpayers now need to earn interest of 1.875% on their money just to stop the value of their savings eroding in real terms, once inflation and tax are taken into account.
But research carried out by financial website Moneynet.co.uk found that 78% of variable rate accounts, excluding ISAs, are paying interest of this level or less.
Higher rate taxpayers face an even greater challenge in getting a real return on their money, as they need to receive interest of at least 2.5% in order to stop the value of their savings falling.
The website’s Andrew Hagger said: "With inflation rising sharply, savers need to check their rate to ensure they’re not losing out – anything less than 1.875% for a basic rate taxpayer and the value of their cash is being eroded.
"Don’t let your savings languish in a sub-standard account – you may have to move your emergency or rainy day fund to an account offering a 12-month bonus and then switch away when the bonus falls away."
