Average savings rates on instant access deals have fallen to a dismal 0.17% while the average cash ISA pays just 0.96%.
The latest figures from the Bank of England show that average savings rates on all types of account have plummeted over the past year, as banks and building societies struggled to cope with the credit crunch. The fall has intensified since October 2008, when the Bank of England started to cut the base rate. This has fallen from 5% in October to just 0.5% in March.
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Source: Bank of England
Other research reveals that regular savings accounts, which are included in the Bank of England’s statistics, have also taken a hit. These have more than halved over the past year to just 2.64%. Choice for people who want to save on a monthly basis has also dried up, with the number of regular savings accounts paying more than 5% reducing from 66 last year to just 11.
Sean Gardner, director of MoneyExpert.com, which carried out the research into regular savings rates, says: “Savers are bearing the brunt of the Bank of England’s efforts to stave off a prolonged recession.”
However, he adds that while rates have taken a knock, there are still some attractive regular savings accounts out there. For example, Barclays pays a fixed rate of 6% on its monthly saver, which requires you to put aside between £20 and £250 a month for 12 months.
The same is true for fixed-rate accounts, cash ISAs and even instant access deals.
ICICI Bank pays up to 4.1% AER on its HiSAVE two-year fixed account or 3.9% AER on its HiSAVE 12-month deal. Both bonds require a deposit of £1,000. Early access is not allowed.
Halifax pays a competitive 3.35% AER on its fixed-rate ISA – but bear in mind this is a four-year bond and no withdrawals are allowed during this period. You can open this account with a £500 deposit, but additional deposits are not permitted.
Or, Barclays has launched a new cash ISA paying 3.61% AER which is available to both new and existing customers. The Golden ISA can be opened from as little as £1, and includes a 12-month introductory bonus of 1%.
Finally, First Direct pays 7% AER on its regular ISA. You'll have to save between £25 and £300 per month for one year, and no partial withdrawals are allowed during this period.
ING Direct pays 3% AER, including a fixed 12-month bonus of 1.47%, on its varialble rate savings account. You can open this deal from as little as £1, and there are no penalties or restrictions when it comes to accessing your money.