How a decade of rock-bottom interest rates has cost savers at least £100 BILLION in interest payments
- Interest rates are low with some savings accounts paying as low as 0.05 per cent
- Before financial crisis, from 1998 to 2007, savers earned £233billion in interest
- MPs have called for government and banking industry to act on the issue
A decade of rock-bottom interest rates has cost savers at least £100billion in interest payments, figures show.
Interest rates have been at – or close to – record lows since the financial crisis a decade ago, with some savings accounts now paying as little as 0.05 per cent.
Even after the Bank of England hiked base rates to 0.75 per cent last month, major banks have continued to punish loyal savers by failing to pass on the full rise to all their customers.
Before the crisis, from 1998 to 2007, savers earned £233billion in interest. Following it, from 2008 to 2017, they have earned just £129billion.
Even after the Bank of England hiked base rates to 0.75 per cent last month, major banks have continued to punish loyal savers by failing to pass on the full rise to all their customers. File photo
This is despite savers holding £1.3trillion in 2017, compared with £460billion in 1998.
The figures were compiled by website Stepstoinvesting.com using Bank of England and Office of National Statistics data.
MPs and consumer experts warn that, unless the Government and banking industry acts, the dire situation savers have had to endure will continue.
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Tory MP Simon Clarke, who sits on the powerful Commons Treasury select committee, said: ‘Millions of people are now in a position where they are paying to save. It’s a scandal.
‘Yes we have a responsibility as a Government but the savings industry has a responsibility to find innovative products that work and they are not being very forthcoming for their loyal customers.’
While further rate rises are expected in the coming years, the Bank of England insists progress will be slow, offering little respite to savers.
Tory MP Simon Clarke, who sits on the powerful Commons Treasury select committee says ‘it’s a scandal’
Only three small building societies – Holmesdale, Beverley and Swansea – have pledged to increase rates on all accounts by 0.25 per cent.
Laith Khalaf, senior analyst at investment firm Hargreaves Lansdown, said: ‘It’s been a lost decade for cash savers, who have seen prices rise faster than their deposits in the bank.
The extraordinary measures taken by central banks in response to the financial crisis probably saved us from a meltdown of catastrophic proportions, but spread the pain over a long time frame.’
A spokesman for UK Finance, which represents financial firms, said: ‘Interest rates affect savers and borrowers in different ways and currently borrowers are benefitting from historically low rates.
‘While customers have seen lower returns on their savings, banks have made it easier for customers to shop around to get the best deal for them, including clearer communications about the rates they receive, faster cash Isa transfers and stronger customer prompts before a rate is reduced.’
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