Savers are losing money in a rapid fashion

Published on in Banking News by

Savers in the UK are losing approximately £800 for every £10,000 over five years, as the average savings account has been unable to conquer inflation.

Due to the cutting affects of tax and inflation, savers who invested £10,000 five years ago will have had the spending power of their savings reduced to £9,209.

saving-accounts-ukAccording to the Consumer Price Index (CPI), a moderation of price growth to 2.8% from 3% has occurred, but despite this the latest inflation figures have revealed that savers are still losing value on their money at a significant rate.

Sylvia Waycot, a financial expert, said: “Today’s fall in CPI is to be welcomed, although the nation’s savers will be slow to cheer as their hardship continues with little relief.”

A financial service has said that an account paying a minimum of 4.7 percent is needed for a higher rate taxpayer in order to counteract the impact of inflation and tax.

However, the service added that there are a limited number of accounts on the market that offer this rate, which is leaving many savers struggling.

Ms Waycot added: “UK savers are not fat cats moaning because their huge investments aren’t making enough; they are predominantly people who have saved all their lives to help supplement incomes when they retire. It is sad that this frugality now offers little to no reward.”

There is more hope for basic rate taxpayers as there are around 210 accounts available that negate the effect of tax and inflation.

Individuals paying 20 percent tax will require a rate of 3.7 percent to beat tax and inflation, according to financial experts.

Due to the large number of different saving bank accounts on the market, it is crucial that savers looking to beat the corrosive impact of tax and inflation research the different accounts available from different banks.

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