‘Savings rates are so low, I can’t find a good deal anywhere’

The past few months have been the worst for savers in more than a decade – is there anywhere they can find a decent deal? By Harry Brennan

Savings rates are at their lowest on record, with the average interest falling below 1pc for the first time during the coronavirus pandemic. It has been the worst six months for savings deals since the financial crisis, with rates on offer falling harder and faster than at any point in the past decade. All savings accounts – including easy-access, fixed-rate and Isas – now pay an average interest rate of less than 1pc, with many high street bank accounts offering savers almost no interest at all.

The Bank of England’s main bank rate was cut earlier this year to just 0.1pc, the lowest it has ever been, in an attempt to give businesses a fighting chance of surviving the coronavirus downturn by giving them access to cheap credit and encouraging consumers to spend money.

But it poses serious questions for everyday savers like David Stansfield, 78, from Accrington, Lancashire, about how to shield their cash from the effect of inflation over time.

He has little knowledge of the stock market and fears losing money in today’s volatile economic climate. A former sub-postmaster, he has £8,000 in rainy day funds and asks whether there is anywhere he can still find a decent deal.

Susan Hannums

Co-founder of money advice site Savings Champion: There are currently 17 savings accounts on the market paying no interest at all and 700 accounts paying less than 0.1pc. These represent 17pc of the savings market, which highlights the plight that savers face at the moment in order to get a halfdecent return.

The first and simplest option is a straightforward easy-access account, nt, with the best rate currently availilable from National Savings and nd Investments, the Government-backed ed 100pc secure savings bank.

At the moment NS&I pays 1.15pc on its Income Bonds, which pay interest st on a monthly basis and allow access to money without restriction or penalty. .

NS&I also offers the second-highest st paying easy-access account, paying ng 1pc. Rates are variable and in this clilimate can be quick to change. However, r, the Government has asked the bank to increase its financing target from £6bn bn to £40bn, suggesting it will keep rates es competitive – and maybe even increase se them – to entice customers.

Another option is fixed-rate bonds. s. United Trust Bank pays the best rate, e, fixed for 12 months at 1.1pc and for two wo years at 1.2pc.

If you are happy to lock the money ey away for longer, you can get 1.3pc with th United Bank UK for three years and nd 1.4pc fixed for five years with RCI Bank nk or United Bank UK.

Adrian Lowcock

Head of personal investing at Willis Owen, a fund shop: With cash rates low, investing presents ts the potential to boost your returns, s, although it comes with some risk of losing money.

If you have a decent amount of time before you need the money, say at least five years, then putting some of your cash savings into investments might make sense.

One of the most important and fundamental aspects of investing is that it is easier to grow your money if you have not lost half of it already, so capital preservation is a big part of investing. There are a couple of managers who do this very well.

Suzanne Hutchins, who manages the BNY Mellon Real Return fund, invests in a broad range of assets with the aim of delivering a return of 4pc over the longer term. The core portfolio invests in shares, bonds and infrastructure to achieve this goal.

Another option is bonds. They offer a higher yield than cash savings but are not as risky as stocks, with companies rarely defaulting on their interest payments on blue-chip corporate bonds.

The Janus Henderson Strategic Bond fund, co-managed by John Pattullo and Jenna Barnard, invests in many different types, but mainly in corporate bonds that are issued by companies.

There are 17 accounts on the market paying no interest at all, and 700 paying less than 0.1pc

An option to consider is bonds, which offer a higher yield than cash savings but are not as risky as stocks

David Stansfield, of Accrington, Lancashire, has £8,000 in savings