Over the past year, high street savings have grown just 1.4%, the lowest rate seen in over ten years, according to the latest figures from UK Finance.
This figure is lower than the rates of growth that were seen in February and March, at 1.9% and 1.8% respectively. Previously, the annual growth of cash savings only dropped below 2% twice since the figures were first published in October 2007.
However, while the amount of money in easy access accounts on the high street grew by 4% in the year, the amount in fixed term or notice accounts dropped fell 6%.
UK Finance further reported that money in easy access accounts continues to “overshadow” cash in fixed rate accounts. In April there was £6.35bn in easy access accounts and just £2.08bn in fixed rate and notice accounts. In April there was also £1.57bn in cash ISAs.
Hargreaves Lansdown personal finance analyst Sarah Coles said: “Miserable interest rates on the high street continue to blunt enthusiasm for cash saving. In some parts of the market, savers are giving up entirely, with a 6% drop in the cash in fixed rate and notice accounts and a 5% fall in cash ISA savings over the year.”
“Cash ISA savings have been ravaged by the introduction of the £1,000 tax free savings allowance for basic rate taxpayers. Many savers just don’t see the point of cash ISAs anymore – particularly when the rates on the equivalent savings accounts are higher. Of course, they may feel very differently when rates rise, they build up substantial savings, or they move tax brackets and suddenly find themselves paying tax on their savings, but for now, cash ISAs are in the doldrums.”
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