2013 Was Worst Year for Savers

Bank of England base rate remains at record low levels - and competition within the savings market has dried up. This has been the worst year for cash returns

Emma Wall 27 December, 2013 | 1:24PM
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Cash rates continue to offer savers little return on their cash. As stock markets across the globe rise following the global recession, the cash asset class still lags behind, offering few opportunities for savers to beat inflation. 

It has almost been five years since the Bank of England lowered base interest rate to a record level of 0.5% - but despite no movement in base rate, savings rates have fallen this year. 

In the past new savers have at least been rewarded with welcome bonuses, pushing initial interest rates skyward, but 2013 proved to be the year that both new and loyal savers went unrewarded. 

The average interest rate on an easy access savings account has fallen from 2.2% at the beginning of the year, to less than 1.6% today. 

However, there is some respite on the horizon for savers. Rate cuts on existing savings accounts have become less frequent and competition within the savings market has picked up. The Funding for Lending Scheme - a considerable contributing factor to the downward pressure on rates - has been revised, which should also prove a boost to savings accounts.

Susan Hannums, of SavingsChampion.co.uk said although savers should not expect to see a rush of rate rises anytime soon, 2014 already looks like it could be an improving year compared to 2013.

"Of course, we wouldn’t want to speak too soon" she warned. "Even though we thought that 2013 was going to be tough, who would have thought that accounts paying less than 2% would be deemed competitive?"

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Emma Wall  is former Senior International Editor for Morningstar