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Savers continue to struggle as base rate stays at 0.5%

Your Money
Written By:
Your Money
Posted:
Updated:
07/02/2013

The Bank of England’s decision today to hold the base rate at 0.5% will disappoint savers as they face 4 years with historically low interest rates.

According to new figures from Wesleyan Assurance Society, a saver with £5,000 could have lost nearly £420 in gross interest over this four year period.

Despite the low base rate originally being introduced to help boost the UK economy, savers who failed to shop around have been harshly punished with low savings rates.

Samantha Porter, from advisory firm Wesleyan, said: “Making sure savings are working as hard as they can is often at the bottom of people’s priority list.

“Our calculations show that failing to shop around for the best deal can have a significant impact on savings.

“With many people keeping their money in accounts paying just 0.5% a year or less, savers could have missed out on considerable sums in lost interest over the past four years.

“In reality, with inflation still above the target rate of 2%, savers need to work even harder just to stop the real value of their money from being eroded.

“One way to lessen the effect is to make use of individual ISA allowances, shielding some or all of their savings from income tax and thus preventing it from being eroded further still.”

Wesleyan analysed the difference between keeping money in an account paying interest at the base rate of 0.5% a year compared to one paying 2.5%.

Savers who had built up a savings pot of £100,000 before interest rates fell, the potential loss of gross interest could be £8,366.24.