There have been more than 900 cuts to savings accounts since the beginning of this year and the number is rising as we speak. In the midst of these changes, financial analyst group Moneyfacts have only reported 111 rate increases.
Their data revealed that the average interest rate for easy access savings accounts has significantly fallen from 0.64% to 0.56%. Although the numbers seem small, this drop has a major impact on your savings and the interest you are able to get.
In addition to these changes the rate for one-year fixed-rate bonds has also fallen from 1.43% to 1.15% which is a massive decrease overall. An example of this is if you were to put your money into a fixed-rate bond for two years, you only get an average of 1.39% interest compared to the 1.79% you would have got at the start of the year. The difference is clearly a big one and it makes you question whether you should even bother putting your money into a poorly rated account?
There is constant speculation around the Bank of England as to whether they will cut interest rates grows or leave them as they are. Mark Carney, their Governor, has made us aware that a cut in interest rates could occur in the near future due to the EU referendum. As if we haven’t been struggling enough in this first half of the year, we may now see an even more difficult climb to get a decent return on our finances.
If you are a saver, you need to brace yourself for the tough times ahead as we never know which way the books could turn. The Telegraph has suggested that locking your money into a long term bond is not the best way to get a good return and to hold onto your finances and use short term bonds for your benefit.