Blow to savers as rates slump to lowest levels on record in the UK
Covid pandemic and Bank of England base rate cuts hit interest on accounts, writes PA’s Vicky Shaw
Typical savings rates have cent weeks, the easy access slumped to record lows market has changed considacross the board, according erably as savers continue to to analysis of the market. flood this arena thanks to
Interest rates have the flexibility the accounts dipped to record lows across provide, and the recent the savings spectrum, rerate cuts made by National search by Moneyfacts.co.uk, Savings and Investments whose electronic records go (NS&I).” back to 2007, found. Ms Springall said data
The average easy access has shown that some savers rate fell to 0.19% in Decemhave been able to build up ber, which is less than a cash reserves in accounts third of the rate of 0.60% during the coronavirus panpaid a year ago, it said. demic.
Fixed rates on savings She continued: “The deals have also tumbled, sight of record low interwith the average one-year est rates may cause apathy bond paying less than half among savers, but it is vital that it did back in December they continue to compare 2019, at 0.54% compared deals on a frequent basis, with 1.23%. especially if they have their
The choice of products cash within an easy access has also shrunk. There are account or are about to now 1,514 savings deals income off a fixed-rate deal. cluding Isas on the market – “There are many chal
312 fewer than a year ago. lenger banks that continue
Rachel Springall, a fito take a consistent place nance expert at Moneyfacts, within the top rate tables, so said: “Clearly it has been a it really is worth considertough year for savers, and ing these more unfamiliar they will be approaching the brands if savers are hunting end of 2020 with rates falldown the most attractive ing to record lows. rates.”
“The coronavirus panPeople whose incomes demic and subsequent Bank have been hit by the coroof England base rate cuts navirus pandemic are behave left an unprecedenting urged to watch out for ed impact on the savings scammers offering them market and uncertainty loans to pay for Christmas remains. which require an up-front
“Savings providers have fee. Loan fee frauds accounthad to react to an extremely ed for one in eight (12%) volatile market this year and scam reports made to the Fithis has meant deals have nancial Conduct Authority been cut multiple times in a (FCA) last December. short space of time in some The scams happen when cases or withdrawn from people are asked to pay a the market entirely. In re- fee in advance for a loan or credit that they never then receive. The FCA said the average loan fee fraud scam costs consumers £220 each.
It added that with research suggesting people spend an average of £355 on Christmas gifts, loan fee scams could cost the equivalent of around two-thirds of the value of the presents sitting under a Christmas tree.
The FCA’s research found 28% of people, including 54% of 25 to 34-yearolds, would consider paying a fee first to secure a loan. This is one of the main warning signs of loan fee fraud. After the turmoil of 2020, people may be particularly at risk of loan-related scams this year.
Six in 10 (60%) people who have experienced a job loss, been furloughed or had their hours or pay cut due to the coronavirus pandemic will borrow to pay for Christmas, the FCA’s research suggests. Nearly twothirds (65%) of people who have faced financial hardship due to Covid-19 said falling for a scam at Christmas would be worse than at any other time of year, while 64% said being a scam victim in 2020 would be worse than in any other year.