04/03/2010
The Monetary Policy Committee’s decisions to leave the Bank of England base rate at 0.50% for an entire year leaves the nation’s hard pressed savers between a rock and a hard place.
David Black, Banking Specialist at Defaqto said: “With inflation at 3.50% and tax being levied on gross returns it’s getting really hard for savers. Once again those hardest hit will be those who rely on savings interest to supplement their day-to-day living, which will be the case for many pensioners.
“The paucity of most savings rates on offer means that many with spare cash will be looking to reduce their more expensive debt, such as outstanding debt on credit cards, unsecured loans or overdrafts, in preference to earning low savings rates. The attractions of competitive offset mortgages should also not be overlooked.
“The highest savings rates available tend to be longer term fixed rate bonds. Those wishing to get the best variable savings rates really need to move their money around on a regular basis to take advantage of special deals such as introductory bonuses. Some existing accounts pay rates as low as 0.01% so savers really need to avoid the obvious pitfalls of inertia."
Savings rates:
| Savings accounts | Average gross AER % | Highest gross AER % available |
| Instant / easy access £1,000 balance | 0.86% | 3.00% 1 |
| 1 Year fixed rate bond £5,000 balance | 2.70% | 3.30% 2 |
| 2 Year fixed rate bond £5,000 balance | 3.44% | 4.25% 3 |
| 3 Year fixed rate bond £5,000 balance | 3.84% | 4.60% 4 |
| 4 Year fixed rate bond £5,000 balance | 4.06% | 4.50% 5 |
| 5 Year fixed rate bond £5,000 balance | 4.43% | 5.10% 6 |
| Easy access Cash ISA £3,600 balance | 1.37% | 3.50% 7 |
| Fixed rate Cash ISA £3,600 balance | 3.38% | 5.00% 8 |
Average loan rates:
| Loan type | Average rate % |
| Credit card typical APR | 18.3% |
| Unsecured Loan typical APR for £5,000 borrowed over 3 years | 13.9% |
| Standard Variable Mortgage Rate | 4.74% |
References:
The highest paying accounts are:
1 AA Internet Extra
2 Post Office 1 Year Fixed Rate Growth Bond
3 ICICI Bank HiSAVE 2 Year Fixed Rate
4 ICICI Bank HiSAVE 3 Year Fixed Rate
The accounts paying gross interest of 0.01% are:
Newcastle Building Society Nova Plus Issue 3 on balances of £1+
Progressive Building Society Investment Share on balances of £1 to £4,999;
Ulster Bank Easy Access Savings on balances of £1+
For further information contact our press office:
David Black
01844 295 535
4 March 2010
About Defaqto: www.defaqto.com
Defaqto is an independent financial research company specialising in rating, comparing and analysing financial products.
Since 1994, Defaqto has built the largest, whole of market, financial product database and become one of the leading providers of financial product data in the UK. We now cover over 30,000 products across banking, life, pensions, investments and general insurance.
Our experts validate and analyse the data to provide insight and consultancy to all layers of the financial services sector including IFAs, mortgage and general insurance brokers, providers, web aggregators and the public sector.
Our products and services include the following:
Aequos Online
An extensive, independent, financial product analysis and comparison database available in the UK. The database contains feature, rate and fees information on more than 30,000 products from nearly 2,000 providers. Our customers include leading insurance and assurance companies, banks and building societies and investment organisations.
Defaqto Engage
An integrated system for independent financial advisers (IFAs) and insurance brokers. The system makes the reporting, analysis, recommendation and review process easy, delivering the perfect product to meet client needs.
Defaqto Compare
An interactive, comparison tool enabling consumers to easily compare product features against each other on a host of key features, using a simple ‘traffic light’ system.
Defaqto Star Ratings
Our Star Ratings reflect the quality of a financial product and help to identify the range of features and benefits in each one. We review and assess every financial product across various categories and award a Star Rating from 1 to 5. The ratings are aimed at helping consumers and advisers decide which product suits their specific needs. Providers also use the ratings to ensure they offer products to meet differing consumer demands.
Defaqto Group owns and operates Defaqto Limited and Defaqto Media Limited. Defaqto Group is backed by FF&P Private Equity Limited, the private equity division of Fleming Family & Partners, and Acuity Capital Management Ltd.
