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Interest rates for savings are pathetic. What else could I be looking at? The big danger with an economy in trouble and with the very low interest rates brought about as a result of the Government's policies, is that inflation (the process by which money loses its purchasing power) can become greater than the rate of interest your savings are getting. Presently inflation is running at 4.5% (CPI measure), 5.2% (RPI measure) and 6.6% (in real terms), so if your savings are only getting 2% p.a., your money is worth less at the end of a year than it was at the beginning. None of us can do anything about interest rates, but what we can do is look at making sure that we're not paying tax unnecessarily on savings by making use of ISA allowances. You might try looking at interest rates for "direct" savings with building societies, where you have access to your money over the Internet - the rates offered are sometimes better. Remember, though, what it is that interest rates represent - we've all heard the stories about charities, trades unions and local authorities as well as ordinary, everyday folk who put their money in attractive "high interest" accounts with Icelandic banks. Interest rates are an indicator of how risky an account or savings scheme might be - the higher the rate, the higher the risks. The more a bank wants (needs!) money, the higher the interest rate will be to attract it. Some things never change. Another thought; if you've got a mortgage, what about remortgaging to an offset mortgage and using your savings to reduce your mortgage costs? Or paying off some of your mortgage? Either can save you thousands in interest charges. Come and find out how it works and what you might save. You might form the view that with interest rates so low generally (and what there is, taxed) the opportunity cost of saving monthly into a unit trust - probably using your ISA allowance - is so low that it's worth a thought. We can help you with information and personalised advice. Interest rates are a bit like the weather - they'll be what they'll be. For heaven's sake, though, don't draw your life savings and throw them under the mattress; if you do, you're still prey to inflation, but worse, you're exposed to complete loss if something happens. At least while your money's in the bank the government has guaranteed some of it - up to £50,000 in each qualifying bank you've deposited money - under the Financial Services Compensation Scheme.
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