Poor Saver's Rates

Written By Toni Burns On 14/02/2014

Since Bank of England Governor Mark Carney spoke earlier in the week about the economy and the Bank's plans, expectations have changed slightly regarding the first interest rate increase.

Economists were anticipating the first rate hike around Spring of next year. Now the market are thinking it may be a couple of months earlier.

Whilst the 'gradual and limited rate rises' were welcomed with relief for both home owners and businesses, it was not such good news for savers who have seen very little return on their investment for a while now.

Last August Mr Carney introduced his flagship forward guidance policy linking a bank base rate rise to an unemployment 7 per cent target. Now as the UK approaches that figure standing at 7.1 per cent, Mr. Carney stated that the Bank will be sticking with the guidance, albeit adjusting it as far as the jobless total is concerned.

Nevertheless, even without the Governor's speech, savers have continued to experience their savings rates decrease over the past couple of years whilst interest rates remained at 0.5 per cent.

This is because building societies and banks have not needed to tempt any more people wanting to invest their money as they have more than enough already. Therefore the financial institutions do not have to compete against each other, thus bringing saving rates lower.

Britannia building society, who were saved from collapse by the Co-operative Bank according to BOE's chief regulator Andrew Bailey, appear to have the most competitive easy access rate offering 1.5 per cent at the moment. However, there is a minimum deposit of £500 needed plus no more than four annual withdrawals.

Anna Bowes, founder director of account comparison company Savings Champion says,

Yet again there is no sign of an end to the plight of savers any time soon. We are concerned that there is no support, not only for existing savers but also the savers of tomorrow.