Large numbers of savings accounts now pay less than inflation
2 November, 2016
Millions of people in the UK who hold money in ‘traditional’ saving accounts could see the value of their holdings dwindle as rates continue to fall and inflation rises to 1 per cent.
According to one study by Savings Champion, more than 600 accounts now offer less than 0.3 per cent, while there are more than 2,000 accounts where savers are earning less than 1 per cent.
In fact some banks, such as First Direct, are offering current accounts that pay 0 per cent while others such as Ulster Bank’s Easy Access Savings account and Danske Bank’s Midas Gold account offer just 0.01 per cent.
Even the best high interest accounts only pay five times the current inflation rate, however they also tend to pay high interest on small balances and often come with a number of caveats.
An example of this is the FlexDirect account from building society Nationwide, which offers 5 per cent on balances up to £2,500. However, savers must pay in a minimum £1,000 each month and the rate is only available for 12 months.
All figures and rates outlined in this article were correct at the time of publication and given as examples of the current savings market. They are not intended as financial advice.