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It’s a “miserable time” for savers

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by David Masters

Nearly eight in ten variable rate savings accounts pay interest at lower than the rate of inflation, new research has discovered.

Personal finance website Moneynet calculated that basic rate taxpayers need an interest rate of at least 1.875% gross on their savings if they are to beat the current inflation rate of 1.5%.

Yet only 22% of the variable rate savings accounts on offer pay interest at or above this rate.

This leaves many savers watching their savings lose spending power.

Moneynet spokesperson Andrew Hagger said the situation could get even worse if the upward trend of inflation continues.

“If inflation continues to rise, savers will find it increasingly tough to get a real return on their money,” Hagger said.

“It’s a miserable time for those working to put some money aside and this looks like it is not going to get any better in the months ahead,” he added.

“Given the situation, there’s almost no incentive to save any money.”

Savers should always look out for the best interest rates available, Hagger concluded.

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News posted: November 19, 2009

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