ii comments on research revealing fall in savings rates and choice of deals

Our reaction to Moneyfacts research covering savings rates for easy access, fixed bonds and ISAs.

Moneyfacts has today released data revealing that average savings rates for easy access, fixed bonds and ISAs have fallen to their lowest levels seen since records began pre-credit crash.

Key highlights include:

• The average easy access rate has dropped to a record low of 0.30%.
• The total number of savings deals (including ISAs) stands at 1,456, the lowest seen since November 2016 (1,438).

Myron Jobson, Personal Finance Campaigner, interactive investor, comments: “Savers have been trapped between a rock and a hard place in recent history. The rate of interest offered on many savings products is simply unattractive, but the stock market is too risky for those with short term savings goals.

“Savers have often struggled to get a decent return on savings products in the current low interest rate environment which has persisted for over a decade when the base rate was first lowered to help stimulate economic growth following the financial crisis. The recent cut to the base rate to help remedy the economic impact of Covid-19 has been a bitter pill to swallow for savers, as banks and building societies were not as slow to pass on the reduction as they were to apply the modest 0.25 percentage point rise in base rates to 0.75% back in August 2018.

“So where do savers go from here? We all need a cash savings for rainy days, to foot the cost of for things like a broken boiler and oven repair, or a change in personal circumstances from health through to wealth – and the situation could go from bad to worse once the Government’s furlough scheme comes to an end in October. 

“So, keep squirreling away if you can, particularly via a tax shelter like an ISA. Cautious savers and investors looking to brave a toe in the stock market might want to think about regular investing, which can smooth out the highs and lows in the price of shares, from as little as £25 per month. But a long-term view of at least 5 years – and preferably ten – is crucial and not everyone has the luxury of time. 

“If you are a regular investor, be aware that some investment platforms charge you for the privilege, while others, such as interactive investor, don’t. Nobody wants to be taxed unnecessarily on their wealth – least of all now – because charges eat into your returns. This is bad enough when the good times are rolling, but even more so in difficult times. It’s worth assessing investment platform costs more generally. For those with larger pots, a flat fee could save you thousands over the long term, but those with smaller pots might prefer percentage fees – in the short term at least.”