Savers have been hit by a double-whammy – a rise in the cost of living and falling interest rates.
Official figures put inflation at 3.8 pc, its highest level since January last year. And savings providers have been quick to pass on rate cuts to their customers since the Bank of England base rate fell from 4.25 pc to 4 pc.
As a result, there are millions who are earning just up to 1 pc on their money, the lowest rate for over two years. Your money is devaluing at the rate of 2.8 pc a year – while prices are going up by 3.8 pc.
This can happen on standard easy access savings accounts and cash Isas, and savers must beware the trap.
If you are with Halifax Everyday Saver, Instant Isa Saver and Isa Saver Variable, you should know that the bank cut the rate on these accounts last week.
Lloyds Easy Saver, Cash Isa Saver and Instant Cash Isa went down to the same level. Both pay this rate on up to £25,000 and only 1.05 pc on larger balances. Santander also pays 1 pc on its Everyday Saver, Instant Saver, Easy Isa and Isa Saver, as does Cahoot on its Savings Account.
There are millions who are earning just up to 1 pc on their money, the lowest rate for over two years, writes Sylvia Morris
TSB Easy Saver Account and Cash Isa Saver pay the same 1 pc if you have been with them for over
a year, and the bank plans to change the rates following the August base rate change. However, Metro Bank is even worse at 0.9 pc on its Instant Access Savings and Instant Access Cash Isa.
National Savings and Investment (NS&I) tells me there are 1.4million savers in its Investment Account which pays just 1 pc. There is over £1.5billion in this old postal account, with huge balances of £50,000 or even £100,000.
Check that your family and friends are not among them. If nothing else, get them to move to NS&I Direct Saver, the online and telephone account.
It only pays 3.3 pc (likely to be cut soon), but at least they can treble their interest.
Some providers have dished out harsh cuts. Atom Instant Saver Reward (down 0.58 pc points to 3.93 pc), Cynergy Bank Online Isa (down 0.3 to 3.9 pc) and Coventry 6 Access Isa Online (down to 3.65 pc).
Only one in ten variable rate accounts now pay over 4 pc, says data scrutineers Moneyfacts. Top picks include Spring app-based account at 4.3 pc and Charter Savings at 4.31 pc on its Easy Access Issue 63.
Cahoot Simple Saver offers 4.4 pc, but move your money after a year or end up in its savings account paying 1 pc.
On easy access cash Isas the best rates are 4.31 pc from Charter Savings Bank and 4.18 from Ford Money. Family BS Market Tracker Cash Isa pays 4.3 pc, but these rates will change on October 1.
