You are here: Home - Saving & Banking - News -

Savings pots earning less than 3.25% interest are losing their value

0
Written by:
23/10/2012
Savers are being urged to take a close look at their savings rate to make sure that they are earning interest at a higher rate than inflation.

The rate of inflation is currently 2.6% and a savings rate lower than that will mean the pot of money will be losing its buying power over time, according to financial planning website, Moneyvista.

Savers need to have all (non ISA) savings in accounts which are earning a minimum of 3.25% interest, in order to just cancel out the eroding effects of inflation.

Teresa Fritz, consumer finance expert at MoneyVista said, “The rate of inflation has a direct impact on your savings, as it controls the buying power of your money.

“If the rate of inflation is higher than the rate you are receiving on your savings, your savings are actually losing their value.”

Moneyvista says that despite the touch economic climate, there are still some savings accounts which can help boost your savings pot.

Some rates are higher than inflation even after tax.

Savers prepared to tie down their money for a longer period stand to gain the best rates.

Fritz advised: “Banks and building societies entice you in with seductive headline rates.

“But these often include bonuses which fall away after a few months, leaving you earning a pitiful rate of interest on your savings which is often below inflation.

“Unfortunately this means it’s not just enough to shop around for a best rate account when you open a savings account.

!You have to keep track of the rate you’re getting and be ready to switch if you want to make sure your savings aren’t eaten away by inflation.”

Moneyvista advises savers to shop around for the best interest rates and to look around for best buys.

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
2219206-mortgage-icon
Mortgage approvals hit five-month high

The number of mortgage approvals hit a five-month high in September, fuelled by property purchase as the remortgage market contracted.

Close