Pain for savers with frozen interest rates
Many savers are seeing the value of their funds diminish as interest rates continue to fall behind the rising cost of living. The Bank of England has announced that the record low Bank rate of 0.5% will remain for another month.
Some rates for instant access accounts stand at 3%, those being most generous as this is currently the same as the rate of inflation. However, the average instant access account in the UK only offers 0.22% in interest, as figures from the Bank of England show.
The average cash ISA gives interest of 0.66%, again from the data provided from the Bank of England. On average the savings rate for an instant access account is reported to be slightly less generous than that of a year ago, when it stood at 0.3%, with ISAs being a little more substantial. Overall, during the three years that the Bank rate has been at a record low, rates have experienced little change. Some banks and building societies have been trying to raise funds in order to lend out mortgages by offering more generous rates.
Savers seem to be the only firm alternative to the lending cut back Banks and building societies are experiencing because of the difficulty of raising cash from international financial markets.
If the Bank of England could have cut the Bank rate to 0.25% this time, as some suggested it would have benefited about 2.5 million households, which have mortgages that track the Bank rate.
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