Savers are no doubt aware of the struggle to earn a decent return in the current market. Interest rates are at record lows and there is little incentive for consumers to put money aside, particularly if they have a short-term savings goal. As a result, savers may be facing a savings shortfall for the future.

The latest research from Moneyfacts.co.uk shows the significant difference in the amount of interest on offer today compared to previous years, and how much savers are losing out on.

In fact, some of the top rates five years ago paid three times as much interest, showing just how far the rates have fallen.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Consumers might have the best intentions to save, but the sad truth is that there is little incentive for them to put money aside due to the poor rates on offer. In the current low rate environment, there is more reason for customers to spend instead of save, which means they could be putting their savings goal at risk.

“It could be a worrying future for anyone who fails to save up for their desires. However, it’s not just low savings rates that are stopping them. Some have little disposable income to put aside for the future, which in the event of a crisis might see them having to turn to credit, which could become costly.

“It’s not just short-term savers that are feeling the pinch, as those who rely on their savings as a source of income will be the ones suffering the most. Providers simply lack the need for savers’ deposits, and there doesn’t appear to be much help on the way to address this problem.

“Savers might well be treated to the much-anticipated investment bond from NS&I in the spring, paying 2.20%, but the maximum investment is £3,000, fixed for three years, so it is unlikely to appeal to those with a much larger pot, or those who do not want to tie up their cash over the longer term.

“Until some action is taken to kick-start the savings market by somehow forcing providers to require savers’ funds once more, we are not going to see a resolve to the savings crisis for at least a few years.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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