Wednesday, 13 April 2011

Paltry interest on your savings

The average interest we are being paid for a tax-free Cash ISA has gone up. Wonderful!

Except that it's risen from an miserable 0.43% to a meagre 0.53%.

The Bank of England's April digest of interest rates shows that the typical instant access savings account pays just 0.3%, no better than the month before.

Term deposits earn 0.84% on average and fixed rate bonds bring in 2.71%.

With inflation at 4% measured by the Consumer Prices Index, these rates show how Britain's savings are shrinking.

You would need to be earning interest of 5% plus to beat inflation, if you pay basic rate tax.

So it makes sense to check what rate you are getting. And some people might do better paying off some of the mortgage.

The average tracker mortgage costs 3.51%, while the average Standard Variable Rate mortgage has an interest rate of 4.05%.

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