Base interest rate to remain same, savers warned

As the Bank of England’s Monetary Policy Committee gives further indications that the base rate of 0.5 per cent will remain at its historic low for even longer, savers are being cautioned that interest rates are going to persist in their abysmal state.

Interest rates on instant access accounts and fixed rate bonds seemed to be recovering during the first half of 2011 due to renewed competition between providers of personal and business bank accounts.  However, some of the larger financial services providers in the UK are now cautioning that further delays to a rate rise, coupled with a marked increase in the cost of offering top rates, is threatening to push them over the edge.

Many high profile financiers have already slashed rates over the past few weeks.  Nationwide alone has reduced the bonus on its 3.1 per cent best buy e-ISA and instead offers a new Online ISA that offers only 2.75 per cent.

MEanwhile BM Savings, has also slashed its 5 per cent best buy ISA.  This leaves Coventry Building Society’s equivalent deal as the best after-tax savings offering available in the UK.

Another to bow out of the savings tables is Sainsbury’s, which has decided to withdraw its fixed rate bonds from the market.  This includes the financial service providers top 3.85 per cent two-year fix.

Savers looking to find a good fixed rate need to act as soon as possible, said one financial expert.  Moneysupermarket’s Kevin Mountford, remarked that there was no time more crucial for savers than right now for the consideration of savings rates, as rampant inflation puts the finances of the nation under strain.

Savings providers are still in competition with each other currently, said Mr Mountford.  However, savers must act fast if they wish to take advantage of these rates, as the financial expert predicted that their availability will likely be incredibly limited.

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