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

Cash savings grow at lowest rate in a decade

0
Written by: Paloma Kubiak
25/05/2018
The annual growth in cash savings came in at 1.4% for April, the lowest rate in more than 10 years, statistics reveal.

This figure is down from the 1.8% reported in the year to March, and 1.9% in the year to February.

Before that, the annual growth rate had only fallen below 2% twice since the figures were first published in October 2007, according to UK Finance.

Savers are choosing to keep more of their money in easy access accounts as £6.35bn was held there in April, compared to £2.08bn in fixed rate and notice accounts.

ISA cash deposits across the high street banks saw a slight increase on the previous month to coincide with the end of the tax year (£1.57bn total in April). And card spending was 9.8% higher than a year earlier.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said miserable interest rates on the high street continue to blunt enthusiasm for cash saving.

“In some parts of the market, savers are giving up entirely, with a 6% drop in the cash in fixed rate and notice accounts and a 5% fall in cash ISA savings over the year.

“Cash ISA savings have been ravaged by the introduction of the £1,000 tax free savings allowance for basic rate taxpayers. Many savers just don’t see the point of cash ISAs anymore – particularly when the rates on the equivalent savings accounts are higher. Of course, they may feel very differently when rates rise, they build up substantial savings, or they move tax brackets and suddenly find themselves paying tax on their savings, but for now, cash ISAs are in the doldrums.”

Turning to fixed rate savings accounts, Coles said many pay below 1% so savers “don’t see the point in tying up their money”.

“We can only hope these figures also contain a good proportion of people who are sick of lower rates on the high street and are taking their cash to work harder in the challenger banks that don’t show up in these figures.

“At the moment, the challenger banks are stepping up their game in the one-year fixed market in particular, so you could get an ‘expected profit rate’ of 2% or interest of 1.95%.”

Coles added that at a time of low interest rates, shopping around for a competitive fixed rate for a period that suits you is “one of the best ways to make your cash work as hard as possible”.

Related: See our The savings accounts to beat inflation and ‘Should I move my lower paying cash ISA to a top fixed savings deal?’ for more information.

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.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

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...

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...

Money Tips of the Week

  • Discover how your pension can be used to make a range of investments with attractive tax advantages. By… https://t.co/LMSAsBt3hb
  • RT @Defaqto: Looking for your first job? We outline our top tips for understanding and improving your credit score. Take a look @YourMoney
  • @YourMoneyUK Biased. People don't look at this stuff rationally. They also would not buy annuities if there ware decent alternatives.

Read previous post:
‘It won’t happen to me’ and other barriers to buying protection

The belief that premiums are too expensive is one of the top reasons given as to why people haven’t taken...

Close