High inflation gnaws at savings

| March 25, 2010 | 0 Comments
High inflation gnaws at savings

High inflation continues to diminish the value of money put aside into savings accounts, a financial expert has claimed.

Michelle Slade of Moneyfacts.co.uk said that with the Consumer Price Index at 3%, basic rate taxpayers need to find a savings account paying 3.75% interest to ensure their savings pot retains its full value.

However, only fixed-rate bonds and regular saver accounts are currently paying rates this high.

“Inflation continues to erode the value of savers’ money and with interest rates also declining, savers are being dealt a double blow,” Slade said.

“Prudent savers are being neglected and are finding it virtually impossible to combat the effects of tax and inflation.

“Savers have been tempted to tie their money up in fixed rate bonds where higher rates can be achieved, but with base rate likely to rise in the next few years, most savers are only looking for a short term commitment.

“After suffering some of the lowest rates on record in the last year, savers will be hoping that when the Chancellor delivers his Budget speech he will bring them some good news.”

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