Saving conditions 'will get worse'

27/01/2009

Britons might continue their binge-spending despite the recession due to the currently unattractive returns offered by cash savings accounts.

Price comparison website uSwitch conducted research on deposit accounts currently available to savers.

It found that over 300 - one in three of the total - are offering annual rates of 0.5 per cent or under.

Moreover, the study also showed that 23 accounts hold a rate smaller than 0.05 per cent.

This means that money held in the accounts is likely to actually decline in value over time, because of inflation.

The main reason why savings returns are so low at the moment is because the Bank of England has slashed interest rates to their lowest-ever level over recent months in a bid to stimulate the recession-hit economy.

Most savings account providers have passed on these rate cuts to their depositors.

Louise Bond, personal finance manager at uSwitch, commented: "Savings rates will continue to drop in line with the [Bank of England] rate so it's unlikely the situation will improve in the next few months.

"Before making any drastic moves or taking any big financial risks people should speak to a financial adviser to avoid a knee jerk reaction which could result in financial loss."

Tags; Current UK Economy, Young Family Finances, Retirement Money Problems, Recent Graduate Debt,

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