Pensioners Are Feeling the Pinch As Interest Rates Fall to a Record Low
The average rate of interest now being paid on deposit accounts is less than 1 per cent.
Interest on other accounts, such as notice accounts, bonds and tax-free ISA's (Individual Savings Accounts) hit an all-time low last month since banking records were started in 1995.
It is expected that the banks will announce more cuts and savers are preparing themselves for zero per cent accounts.
The worst affected are clients with passbooks for their savings accounts, mostly pensioners.
According to MoneyExpert 290 out of 646 passbook accounts pay less than 1 per cent now, compared to only 9 a year ago.
They say that the older generation like the passbook method and that they are reassured by seeing in black and white what they have, unlike many internet operations.
The Welsh-based Julian Hodge Bank offers savers with less than 1,000 pounds who have variable rate accounts to invest in the zero rate account.
This seems to be a response to campaigning for savers, especially pensioners, to get tax-relief on income from savings.
The aggressive rate cutting that we have seen of late is making it difficult for savers to get a worthwhile return on their money.
Moneysupermarket did a survey in which they found that of 16,500 adults asked, 67 per cent were agitated by the latest cuts.
The Head of Banking, from the price comparison website, believes that these savers are questioning very strongly what the Chancellor and the Prime Minister are playing at; they rely on the income from their savings to survive and they do not seem to be helping.
ICICI have the best deal around at 4.
65 per cent, just cut from 5.
1, but the money is locked into a fixed-rate bond for a year.
The majority of the better savings deals which were on offer have been withdrawn.
Instant Access accounts now offer the lowest rates at an average of 0.
81 per cent, their lowest since 2003.
Accounts that require notice for withdrawal are averaging 0.
82 per cent, another all-time low.
The tax-efficient ISA's have seen a drastic drop by 1.
74 per cent to 2.
09 per cent; the lowest rate ever seen since they were launched in 1999.
Another lowest level rate has been recorded for bonds although they are offering an average of 3.
02 per cent; still one of the best return rates.
Figures were also revealed by the Bank of England on Standard Variable Rates (SVR) and Tracker rates for borrowers, both of which have dropped dramatically.
A tracker mortgage now averages 4.
95 per cent.
Heartwood Wealth Management report that crippled savings are contributing to 1.
4 million people, 55 and over, remaining in semi-retirement.
They are expecting to have to work, part-time or more, and start using their pension funds.
Many mortgages have reduced, helped by the drop in the interest rate, but so far, only 8 lenders have reduced their standard variable rate mortgage after the most recent cut.
Interest on other accounts, such as notice accounts, bonds and tax-free ISA's (Individual Savings Accounts) hit an all-time low last month since banking records were started in 1995.
It is expected that the banks will announce more cuts and savers are preparing themselves for zero per cent accounts.
The worst affected are clients with passbooks for their savings accounts, mostly pensioners.
According to MoneyExpert 290 out of 646 passbook accounts pay less than 1 per cent now, compared to only 9 a year ago.
They say that the older generation like the passbook method and that they are reassured by seeing in black and white what they have, unlike many internet operations.
The Welsh-based Julian Hodge Bank offers savers with less than 1,000 pounds who have variable rate accounts to invest in the zero rate account.
This seems to be a response to campaigning for savers, especially pensioners, to get tax-relief on income from savings.
The aggressive rate cutting that we have seen of late is making it difficult for savers to get a worthwhile return on their money.
Moneysupermarket did a survey in which they found that of 16,500 adults asked, 67 per cent were agitated by the latest cuts.
The Head of Banking, from the price comparison website, believes that these savers are questioning very strongly what the Chancellor and the Prime Minister are playing at; they rely on the income from their savings to survive and they do not seem to be helping.
ICICI have the best deal around at 4.
65 per cent, just cut from 5.
1, but the money is locked into a fixed-rate bond for a year.
The majority of the better savings deals which were on offer have been withdrawn.
Instant Access accounts now offer the lowest rates at an average of 0.
81 per cent, their lowest since 2003.
Accounts that require notice for withdrawal are averaging 0.
82 per cent, another all-time low.
The tax-efficient ISA's have seen a drastic drop by 1.
74 per cent to 2.
09 per cent; the lowest rate ever seen since they were launched in 1999.
Another lowest level rate has been recorded for bonds although they are offering an average of 3.
02 per cent; still one of the best return rates.
Figures were also revealed by the Bank of England on Standard Variable Rates (SVR) and Tracker rates for borrowers, both of which have dropped dramatically.
A tracker mortgage now averages 4.
95 per cent.
Heartwood Wealth Management report that crippled savings are contributing to 1.
4 million people, 55 and over, remaining in semi-retirement.
They are expecting to have to work, part-time or more, and start using their pension funds.
Many mortgages have reduced, helped by the drop in the interest rate, but so far, only 8 lenders have reduced their standard variable rate mortgage after the most recent cut.
Source...