This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/money/2013/may/23/savers-face-limited-options-inflation

The article has changed 7 times. There is an RSS feed of changes available.

Version 2 Version 3
Savers face limited options despite fall in inflation rate Savers face limited options despite fall in inflation rate
(30 days later)
Taxpaying savers who want to earn an interest rate that beats inflation still face a limited choice of accounts, despite a slowdown in the rising cost of living. Figures out this week showed that the consumer prices index dropped from 2.8% to 2.4% in April, offering some relief to cash-strapped households. However, anyone with savings will still see the value of their money eroded, unless they opt for a fixed-rate, fixed-term account or an Isa – and even then, the choice is limited.Taxpaying savers who want to earn an interest rate that beats inflation still face a limited choice of accounts, despite a slowdown in the rising cost of living. Figures out this week showed that the consumer prices index dropped from 2.8% to 2.4% in April, offering some relief to cash-strapped households. However, anyone with savings will still see the value of their money eroded, unless they opt for a fixed-rate, fixed-term account or an Isa – and even then, the choice is limited.
To outstrip inflation, a basic-rate taxpayer needs to earn a rate of 3% in a standard savings account, while a higher-rate taxpayer needs to find a rate of 3.99%. However, financial information firm Moneyfacts said that of 861 non-Isa accounts on the market, only Virgin Money's five-year fixed-rate bond paid as much as 3%. Even in the Isa market, where tax is not paid on interest, savers' choice is restricted. Again, Virgin Money is offering 3% for five years, followed by Principality building society's five-year bond at 2.75%, and Coventry building society's two-year fix at 2.55%. The Isas can all be closed before their end date, subject to the loss of some interest.To outstrip inflation, a basic-rate taxpayer needs to earn a rate of 3% in a standard savings account, while a higher-rate taxpayer needs to find a rate of 3.99%. However, financial information firm Moneyfacts said that of 861 non-Isa accounts on the market, only Virgin Money's five-year fixed-rate bond paid as much as 3%. Even in the Isa market, where tax is not paid on interest, savers' choice is restricted. Again, Virgin Money is offering 3% for five years, followed by Principality building society's five-year bond at 2.75%, and Coventry building society's two-year fix at 2.55%. The Isas can all be closed before their end date, subject to the loss of some interest.
Sue Hannums of website savingschampions.co.uk said that in total 14 Isas beat inflation, but around half have restrictions of some kind. First Direct is offering a rate of 2.96%, but only to people with another account at the bank and on holdings of £40,000 and upwards. Nationwide's Flexclusive Isa pays 2.5%, but you need to have a current account to apply, and fund it with £750 a month.Sue Hannums of website savingschampions.co.uk said that in total 14 Isas beat inflation, but around half have restrictions of some kind. First Direct is offering a rate of 2.96%, but only to people with another account at the bank and on holdings of £40,000 and upwards. Nationwide's Flexclusive Isa pays 2.5%, but you need to have a current account to apply, and fund it with £750 a month.
Hannums said she feared inflation would rise later in the year and make life even more difficult for savers. "Even if you choose a rate that is positive now, it might not be beating inflation in a few months," she said. "Savers need to keep on top of things and move around if necessary."Hannums said she feared inflation would rise later in the year and make life even more difficult for savers. "Even if you choose a rate that is positive now, it might not be beating inflation in a few months," she said. "Savers need to keep on top of things and move around if necessary."
Sylvia Waycot from Moneyfacts.co.uk said money held in savings accounts was being "savaged by stagnant returns". She said that even though Isa rates were poor, savers should still use their £5,760 cash Isa allowance. "You can't claim the allowance back when rates are higher so you should use it now – that way you can move it to a better rate later."Sylvia Waycot from Moneyfacts.co.uk said money held in savings accounts was being "savaged by stagnant returns". She said that even though Isa rates were poor, savers should still use their £5,760 cash Isa allowance. "You can't claim the allowance back when rates are higher so you should use it now – that way you can move it to a better rate later."
Top savings accountsTop savings accounts
Yorkshire BSYorkshire BS
Teachers BS
Coventry BSCoventry BS
Chelsea BS
Powered by MoneySupermarket for the GuardianPowered by MoneySupermarket for the Guardian