Thursday, 20 June 2013

Savings rates cut in half

Interest rates for savers have plummeted since the Bank of England started to channel cheap money to banks and building societies last August through the government's Funding for Lending Scheme.

The point was to cut the price of mortgages and that seems to be working (boosting lending to small businesses has been a bit more of a problem).

But the Bank of England's latest figures show that the average Individual Savings Account (ISA) is paying just 0.69%, half the level of last summer.

The ones with first-year bonuses have dropped to 1.4% from 2.6%.

Normal savings accounts (not tax free ISAs) haven't dropped so much, but they tend to pay lower interest rates anyway.

Banks just don't need to attract your savings. They can get their funds elsewhere.

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