LOOK BACK AT 2014 & LOOK AHEAD TO 2015
For many savers reviewing your savings balances in 2014 may have been a painful exercise. 2014 brought with it the continued fall in savings rates, that have plagued savers in recent years.
It’s not all doom and gloom, 2014 also brought us the Budget for Savers (or so George Osborne said) in the form of the increased Cash ISA allowance from £5,940 to £15,000. And of course the impending National Savings & Investments 65 plus bonds, dubbed Pensioner Bonds, with rates so competitive in the current market, we thought they’d made a mistake.
With increased speculation that this is the year that will bring with it the prospect of a rise in the Bank of England base rate, we can but hope that there is a brighter future for savers on the horizon.
Although it’s been another tough year for savers with the continued rate reductions and limited options for a decent return on cash, with the Pensioner Bonds kicking off the start of 2015 we hope they will breathe some much needed competition back into the savings market.
The government has, it seems, started to recognise the plight of savers however the fact still remains that competition between the banks and building societies is limited and a rise in the Bank of England base rate won’t guarantee the same rise in all savings rates.
There's no denying the savings market is not the same as it once was, but with some shopping around and thinking outside the normal savings box, there are still some competitive rates to be found.
Looking to High Interest Paying Current Accounts for example, offering rates of up to 5% for those with smaller balances, is one option. Using your cash ISA allowance so that any interest earned is tax free should also be considered and of course keeping track of all your savings rates to ensure you're always on the best rates available is essential.
So what do we expect to see? Much of the same with a few exceptions seems most likely although with a general election coming up things COULD change dramatically.
What we might expect:
- NS&I is likely to be busy, with high demand for its Pensioner Bonds
- A flurry of activity for the ISA season (February to May) with a last minute rush of applications. So don't leave it to the last minute to apply and plan ahead
- Markets predict a rise in the Bank of England base rate in the second part of 2015, but will still be gradual with rates no higher than 1% before the end of the year.