Saving rates for consumers have fallen by a whopping 50% since the Bank of England slashed interest rates to 0.5% in 2009.
A lack of competition and the introduction of the Funding for Lending scheme have also had an impact, resulting in the levels of interest received dropping dramatically.
For instance, a saver can now expect to see interest of around £100 on every £10,000, down from £240 when the rates were first cut.
With an elderly population in the UK and with many people nearing retirement they have been hit especially hard by the current economic conditions.
What accounts are the worst affected?
Those putting their cash in fixed-rate bonds and easy access accounts are the worst affected, with interest payouts dropping by 58%.
Five years ago when the interest rate was cut, a top rate of 3% could be found on these types of account, whereas the top rate is only 1.25% today. Internet accounts have also been hit hard, with one reporting a drop from 2.95% to 1.36%.
As a result, consumers are having to assess their options as the list of banks dropping rates seems to be endless.
Savers with their money in ISAs have also not escaped in what may have been previously seen as a strong option. The rates on easy-access cash ISAs have slumped by half during the last five years.
March 5 marked the fifth anniversary since the rates were cut to their current level, while a campaign group carried out some detailed calculations and suggested that savers have missed out on approximately £117 billion in interest across the five year period.
In terms of spending power, savers have lost a further £209 billion and the current situation represents the longest period that rates have been frozen since the aftermath of World War II.
Veering away from savings accounts
One alternative to placing funds into a savings account is to potentially put them onto a prepaid card.
That way it’s possible to carefully manage your finances as only what is on the card can ever be spent, while transactions can be monitored online at any point.
There is also additional security, as the cards are not directly linked to your bank accounts. This significantly reduces the risk of fraud and identity theft, something which every consumer should be taking seriously in the modern day.
If saving is not an option at present, then protecting your finances in a secure location could be the best alternative option.
