Three weeks ago, the markets were 90% certain that there would be a base rate rise announced today (10th May). But, just as we’ve seen happen on many occasions over the last few years, that expectation rapidly fell to just 5% following a string of disappointing economic data, including poorer than expected GDP figures and a drop in house prices.
This is bitterly disappointing for long-suffering savers, who have been waiting for so long for things to improve.
So, with the hand we’ve been dealt, savers need to take action themselves if they are languishing in an uncompetitive account – which is likely to be the case for the vast majority.
Currently, there is almost £721 billion in easy access accounts, according to Bank of England statistics.
Following the last base rate rise in November 2017, the average easy access account increased by just 0.09%, from 0.37% on 1 November to just 0.46% today - even though the base rate went up by 0.25%.
With the average rate being just 0.46% - savers are missing out on over £6 billion per year by failing to move their money. Unwitting victims of inertia – the banks love them.
This average rate indicates what shockingly low rates some accounts are paying, compared to the current best buy easy access account, which is 1.31% gross/AER*.
For instance, some accounts from the biggest savings providers are paying as little as 0.05%. On a balance of £10,000, that is the difference of earning a pointless £5 a year or a more meaningful £131.
And those who don’t need easy access can earn even more. Someone with a deposit of £10,000 can earn up to 1.85% for a one year fixed rate - that’s £185 over the year. And over a longer term, savers can even beat the current rate of inflation, Vanquis Bank is paying 2.52% for four years* and 2.70% for five years*.
Even if a base rate happens in the future, it would be nice to think that all providers would pass that on to their loyal savers – but previous form shows that this simply will not happen.
Savers need to help themselves by moving their money away from a provider that treats them so shabbily.
*We are occasionally paid by some providers if you click through from our Best Buy Tables and open a savings or current account with them. We will never accept a payment that compromises in any way our independent, whole of market approach to providing information on savings products. For clarity we will indicate those companies who remunerate us with an asterisk (*).
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