Somebody who deposited £1,000 in the average savings account would need to wait eight years to earn enough interest to buy a Marks & Spencer turkey. After just one year our saver would only have earned enough cash to buy a Christmas pudding - albeit one from Waitrose.
Octopus Choice, the peer-to-peer lending platform, has calculated how long it would take to earn sufficient interest to pay for a range of Christmas items to highlight just how low savings rates are on conventional cash savings accounts.
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Even with the highest savings one for one year, it would take until 2048 to make enough interest to buy the latest X Box – at which point the kids would probably be middle-aged and old enough to buy their own.
“No light at the end of the tunnel for savers”
Commenting on the findings, Richard Wazacz, head of Octopus Choice, says: “Christmas can be a financial headache at the best of times but if you’re relying on the Scrooge-type rates available on the high street to buy your turkey, tipples and stocking fillers, you’ll be in for a shock.
“With interest rates stuck at record lows for many years, and this situation unlikely to change in the short to medium term given concerns around the economy, there’s no light at the end of the tunnel for savers. In fact, there will be no lights at all, as the Xmas tree won’t make a showing until 2023 at the earliest.”
He adds: “Increasingly, people are having to turn to slightly higher risk products to get any kind of return on their savings and where that happens they may want to seek out independent financial advice in order to best protect their capital.”
Years needed to generate enough interest to buy a selection of Christmas purchases an gifts (click to enlarge):
Methodology: Octopus Choice calculated how many years it would take for £1,000 saved in the best, worst and average one-year high street savings accounts (HSBC, RBS, Lloyds, Santander and Barclays), to generate enough interest to buy various Christmas gifts and staples. The figures above assume interest is compounded. Prices were correct as at 27.11.16.