Savings Rate Cuts Hit ISAs Hard

By: MoneyFacts

Data from Moneyfacts.co.uk can reveal that rate reductions in the savings market have now outweighed rate rises for eight consecutive months.

In May, Moneyfacts recorded just 18 savings rate rises. Disappointingly, rate reductions over the same period completely outshone this figure, with the number of rate decreases standing at a staggering 156, with some deals falling by as much as 2.00%.

While this is certainly bleak news, at least savers’ precious funds won’t be greatly affected by inflation: inflation statistics released today show that the Consumer Prices Index (CPI) stuck at 0.3% during May, which means savers have little to worry about in terms of savings erosion. Unsurprisingly, the vast majority of the 815 savings accounts currently on the market (660) can beat or match inflation, and of these 600 * (102 no notice, 58 notice, 249 fixed rate bonds and 191 cash ISAs) are without restrictive criteria.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:        

“Despite no change in the Bank of England base rate, the number of cuts to savings rates has yet again outweighed any rate rises. Indeed, only one rate increase is currently being recorded for every nine cuts, so savers would be right to expect this trend of sliding rates to continue.

“The most disheartening cuts this month were made to the Help to Buy: ISAs. When they were first launched, those looking to get on the property ladder could achieve a top rate of 4.00%, but the maximum rate on offer has now fallen to 3.00%. Once again, a promising Government savings initiative has failed to deal with savers’ main problem - never ending rate reductions.

“Help to Buy: ISAs were not the only ones to suffer. Just one month after this year’s dismal ISA season 30% of all rate reductions made this month fell on ISAs. Savers trying to keep their returns away from the taxman will be extremely disappointed, particularly as the average easy access ISA rate has fallen by 0.11% in six months to stand at just 0.98%, which is the first time on record that it has fallen below 1.00%.

“There’s no denying that savers are facing hard times; however, this does not mean that they should be content to let their money languish in poor paying accounts. There are good deals out there, but savers will need to keep a close eye on the best buy tables to find a deal that will bolster their returns in a market that is very much under siege.”

Data Note* Please note that the savings product numbers only include deals that are available to all UK residents. Moneyfacts has chosen not to include products that have limited access, such as locals-only, high net-worth clients or linked products, which mean you must have an existing account to obtain headline rates. Moneyfacts has taken the view that as these accounts are not available to your entire readership, their inclusion may be misleading to your readers by directing them to accounts they may not be entitled to. We do, of course, hold all of this data should you require it. Our daily Moneyfacts savings rate monitoring started in July 2015 and is a record of live standard savings account changes, which include fixed rate bonds of all terms, all ISAs, notice accounts and no notice accounts.

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.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.