Savers may actually be enjoying a better return on their savings accounts than they were a couple of years ago - that's the view of a leading personal finance website. Since the Bank of England imposed a series of interest rate cuts, there have been widespread reports of the damaging impact of the economic downturn on savers, and pensioners in particular. However, experts have pointed to the role of inflation in determining the real return savers receive on their funds.
The Retail Prices Index offers a rough measure of inflation, and slumped from -1.1 per cent in May to -1.6 per cent in June. This means that a typical bond offering 3 per cent gross actually earns around 4 per cent once tax is accounted for.
This is in sharp contrast to the days of a 5.25 per cent base interest rate, widely considered by savers to be the glory days. However, financial experts have warned that high inflation can eat into the returns on savings, meaning that an average bond with 6.05 per cent gross could provide a basic rate taxpayer with a real return of just 0.85 per cent.
Financial Experts Claim an Increase in Savings Returns Despite Low Bank Rates
Financial Services > e-banking > Banking news
Financial Experts Claim an Increase in Savings Returns Despite Low Bank Rates
Wed, 15 Jul 2009
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