The UK’s best savings rate, once offered by the Leeds Building Society, has recently been discontinued. With that 5% five year bond off the table, savers are left with the next best deal, a 4.65% bond offered by Saga that is only for those over the age of 50.
What about the rest of us? With several providers cutting rates over the last two weeks, including Yorkshire Building Society and Birmingham Midshires, it seems that savers have fewer and fewer options to get the most return on their capital.
The rate on fixed bonds has been falling continuously since May, with West Brommich Building Society scrapping the second-best fixed bond deal at 3.55% over one year.
In May, the average five-year bond paid 4.34%, while today the return is at just 3.96%.
Compared with the 7.1% return available to savers in November 2008, it is evident that Andrew Hagger, of Moneynet.co.uk, is right in saying, “Savers have had a really rough time for two and a half years now, and I can’t see any change in that for at least 12 months.”
This is because the Bank of England is expected to keep its base rate at 0.5% until 2013, which has had a damaging effect on savings options throughout the UK.
Encouragement for Savers
This does not mean British savers have no good recourse. Savings Analyst Michelle Slade advises people to consider short-term deals and keep informed of the going rates to be able to spot a deal: “The one year bond market continues to see the most activity, with a few providers launching competitive new deals in recent weeks.”
“Savers are keen to get the best rates possible in this low interest rate environment, so when a competitive deal is launched it doesn’t last for long. Savers need to act fast or they could miss out,” continued Slade.
Though Mr. Haggar had a bleak outlook on the options that savers have, he offers encouragement and advice as well: “’The important message, though, is don’t give up.
“The interest rate on a savings account is the icing on the cake – if you carry on putting money away you are building up capital and will have a bigger balance for when rates do rise.”