Savers suffer as interest rates fall
In an amazing backlash to those Savers who have acted responsibly over the last two years, there has been a substantial reduction in interest rates on a number of savings accounts. Indeed there are even signs that some savings accounts are giving zero interest at the moment as confusion reigns in the sector. In general rates have come down by 1.65% even though UK base rates have only fallen by 1.5%, thereby increasing the profit margin for the UK banks.
It also appears that a number of long-term savings accounts have been hit very hard as building societies and banks know that savers will be hit with penalties if they withdraw their funds early. This is not exactly what was expected when the government suggested that savers would be "looked after" even as interest rates fall.
There is a feeling that savers are on the receiving end of the political turmoil in the UK which has seen both the Bank of England and the government place severe pressure on UK mortgage companies. As we saw with the overdraft charge debacle, the banks always seem to have an answer when they are put under pressure by the regulators or the government and it is generally the consumer who suffers.
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