It seems that if savers are wishing to make any sort of decent return on their savings these days they are going to be forced to part with their money for a long time.
Official figures from the Bank of England show the average interest rate on instant access accounts including current accounts was 0.15% at the end of April. This is down on a month earlier even though the Bank interest rate is still the same.
According to one analyst, more competitive deals are available on fixed-rate bonds, but these can tie up funds for a few years.
The economic crisis has arguably hit savers worse than anyone as interest rates on accounts plunged from 5% in September, to 0.5% now.
Pensioners in particular, who use interest payments on life savings to top-up their pensions are making their feelings about this known.
Competition Is Slowly Re-Emerging
The Bank’s figures also show that the average return from instant access accounts fell from 2.42% to 0.15% in just twelve months.
For tax-free Individual Savings Accounts (ISAs) are currently 0.41%, down from 4.81% a year earlier.
However, according to Rachel Thrussell from Moneyfacts, more and more competition is emerging over fixed-rate bonds now that some of the dust has settled after the Bank rate changes at the beginning of the year.
In the past few weeks, interest rates on four or five year fixed-rate bonds has just gone above 4%.
Andrew Hagger from Moneynet said that Child Trust Funds have also taken a battering .
Child Trust Funds Suffer In Silence
The average rate on cash-based Child Trust Funds in October was 6%, the highest rate of interest at 7.75%. Now, interest rates are struggling at 2.38%.
Since 2002 the government have started giving every newborn £250 for their parents to invest in their future.
Mortgage holders however are receiving some good news for a change. The average cost of their repayments has dropped.
The average standard variable rate (SVR) that was being charged for home loans was 3.83% at the end of April compared to 7.23% this time last year.
The prices of Tracker deals has also fallen, but analysts generally believe that the mortgage rates have reached the lowest point they will get to.
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