Cash savers have just experienced the worst six months in more than a decade, as interest rates plummet as low as 0.01 per cent.
New data from Moneyfacts has found that savings rates have been falling steadily since January 2009, and as at 30 June 2020, the savers are pocketing less interest than ever before, with one savings account by NatWest offering just 0.01 per cent per annum.
According to Moneyfacts, the average easy-access savings account is now paying just 0.24 per cent per annum, while the average easy-access cash ISA account is paying 0.37 per cent. By comparison, in January 2009, the average easy access account paid 1.55 per cent, while the average easy access cash ISA paid 2.56 per cent.
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On notice accounts, savers can currently expect to receive an average of 0.57 per cent, rising to 0.63 per cent in a one-year fixed cash ISA.
The best savings rates are available via fixed-term bonds and longer-term fixed ISAs. A one-year fixed bond currently pays 0.71 per cent – down from 3.49 per cent in January 2009 – and a longer-term fixed bond pays 0.92 per cent; down from 3.38 per cent in January 2009. A longer-term fixed ISA offers an average of 0.81 per cent – down from 3.43 per cent in January 2009.
Rachel Springall, a finance expert at Moneyfacts, pointed out that the first six months of 2020 saw the most dramatic rate cuts since the first six months of 2009, when the impact of the global financial crisis was being most acutely felt.
In the first six months of 2009, the average easy access savings account saw its value drop by 0.85 per cent.
There was no change to the average savings rate in the first six months of 2015, and savings rates fell by an average of 0.02 per cent in the first six months of 2019. However, in the first half of this year, the average easy access savings rate fell by 0.35 per cent.
“Savers will be in for a shock to find the first six months of 2020 have been the worst for rate cuts in over a decade,” said Springall.
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“Indeed, all average rates have fallen between January and June this year, but the falls are the largest we have seen since 2009, after the financial crash. This demonstrates how much the market has been impacted by the coronavirus pandemic and base rate cuts, and it will leave savers feeling frustrated and disappointed.”
Springall added that the rate cuts “should be more than enough reason to give savers a push to switch their deal if they are getting a poor return on their hard-earned cash.”
The best easy-access savings rate is currently available via National Savings and Investments (NS&I), at 1.15 per cent, while some challenger banks and notice accounts are offering up to 1.25 per cent per annum.
“It is imperative that savers act quickly to acquire the top rates on the market regardless of which type of savings account they choose, as there seems no end to the downward trend,” said Springall.
“Due to the uncertainties that the coronavirus pandemic has instilled, it is more important than ever before for consumers to build up an emergency fund that they can dip in to should they run into any financial difficulties in the months to come.”