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Interest rates on savings at all time low
Wednesday, 14 January 2009
Writes Hazel Cottrell
hazel.cottrell@consumerchoices.co.uk
The amount of interest paid by banks and building societies on savings accounts dived to a record low last month, with average rates now less than 1%.
The average rate of interest paid on instant access savings accounts hit a five-year low in December at just 0.81%, according to figures from the Bank of England (www.bankofengland.co.uk).
The average interest on notice savings accounts fell from 2.3% in November to 0.82% in December, the lowest level since records began in 1995. For cash ISAs, the average interest rate slumped from 3.83% to 2.09%.
These figures are likely to fall further as they do not reflect last month’s full percentage point base rate cut, which many savings providers only passed on this month, or last week’s additional half point base rate cut.
Chris Eagle, commercial manager at CreditChoices.co.uk said: “Despite the bleak outlook, there are still some decent rates around.
“If you are prepared to lock your money away for a year, you can get 4.65% AER from the HiSAVE Fixed Rate Account from ICICI (www.icicibank.co.uk). Alternatively, if you need to have easy access to your cash, you can get 3.60% AER from the eSaver Account from Alliance and Leicester (www.alliancce-leicester.co.uk).”
He continued: “These rates are unlikely to be on offer for long though, so snap them up while you can. Plus, if you haven’t already, now really is the time to find a best buy ISA and fill it up. When rates are this low, you don’t want tax shrinking your returns even further.”