Just how much interest are(n’t) you earning?
24 August 2016
Last month the Financial Conduct Authority (FCA) published “sunlight remedy” data, showing the lowest interest rates (as at 1 April 2016) offered by 32 providers of easy access cash savings accounts and easy access cash ISAs – typical homes for rainy day money. The tables largely tell their own story:
Range of lowest interest rates (%) available on easy access cash savings accounts at 1 April 2016:
Range of lowest interest rates (%) available on easy access cash ISAs at 1 April 2016:
The regulator noted that at least half of the providers in their sample offered a lowest interest rate of 0.10% or less on branch-based closed easy access cash savings accounts. That means no more than £1 of interest each year (before tax) for every £1,000 invested. For the corresponding ISA accounts, at least half of the providers paid no more than 0.5%.
The tables are not only a painful reminder of how low savings rates have fallen; they are also a wake-up call if you have money in closed accounts, which with few exceptions pay less than accounts still being marketed – a penalty for loyalty.
These low rates – many below the current 0.5% CPI inflation – mean that generally you should avoid retaining anything more than an adequate rainy day reserve on deposit. For how much that reserve should be and your options on any excess, please talk to us.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as long-term investment and should fit in with your overall attitude to risk and financial circumstances.
If you have any queries or concerns please email us or call 0141 221 2984.