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

Short-term savers see rate cuts

0
Written by:
19/08/2008

The average interest rate on instant access savings accounts has dropped from 3.76% to 3.3% since the beginning of the year, MoneyExpert has revealed.  

The financial comparison has found nearly 300 savings accounts pay less than 2% interest and many banks and building societies are cutting rates, despite efforts to attract cash to fund mortgage lending. As a result, the number of accounts paying more than 5% (the current Bank of England Base Rate) has decreased from 270 to 145 over the last six months.

According to MoneyExpert, these findings reflect efforts to attract long-term savings to help improve liquidity levels, rather than short-term accounts that don’t lock in savers’ money. Many banks and building societies are instead boosting rates on bonds and other long-term products instead.

Sean Gardner, director of MoneyExpert.com, explained long-term savings are more attractive to banks, especially at the moment because they want to know they have money to play with and can’t afford to offer as good deals to attract short-term savings that can be withdrawn without penalty at a moment’s notice.

“This explains why there are still some great deals on offer in regular savings and fixed-term bonds. Anyone who has some cash set aside could benefit significantly,” he added.

Analysis from MoneyExpert revealed there are currently 1,501 instant access savings products on the market. However Gardner warned consumers with instant access accounts to watch their rates carefully, as they can fluctuate and around 299 accounts pay less than 2% interest.

He concluded: “Thankfully it’s free to switch accounts so if you’re in any doubt, compare other offers and see if you can get a better deal elsewhere. It’s a saver’s market so don’t accept a bad rate.”

Tagged:

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

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

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.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

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...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Inflation could hit highest level in 17 years

Inflation could hit 7% this year as British consumers are hit with soaring food and petrol bills, according to Chelsea...

Close