For the sixth month in a row the Bank of England (BoE) has left the base rate unchanged at 0.5 per cent, helping borrowers to take out loans for major purchases but leaving savers struggling to get decent returns, according to latest research from an online research group.
Datamonitor’s Financial Services Consumer Insight survey, which measures consumers’ attitudes towards financial services, revealed a trend among consumers to shift their savings from long-term to short-term for easy access. However, this shift severely reduces consumers’ chances of yielding ‘strong returns.’
The situation is further compounded by the fact that the marketplace offers little enticement for consumers.
Data from Moneyfacts, the price comparison website, revealed that 25 per cent of variable rate accounts paid interest of 0.1 per cent or less.
This has had a knock-on effect on consumer mentality with 62 per cent saying they were ‘somewhat concerned or very concerned about the value of their savings,’ said Datamonitor.
In a Natwest survey 23 per cent of the UK population fail to save for a rainy day owing to a lack of attractive deals on offer.
More observant savers have realised that large deposit accounts offer better than average rates.
Although Datamonitor analyst, Will Mayne warned consumers to be cautious:
”Today’s average saver can neither afford, nor risk to lock away large quantities of their funds, for should the worst happen, those savings could quickly need to become a lifeline.
Reflecting on the interest rates on saver accounts, some analysts claim that now is the best time to save because interest on saving accounts have been gradually increasing.
However, this message rarely trickles down to the man in the street who according to Datamonitor, has not seen an improvement in their rates therefore loses the incentive to save.
However, there may be some light at the end of the tunnel.
Supermarkets such as Tesco and Sainsbury’s have waded into the savings market creating much needed competition leading to marginal increases in rates.
