If, like many people, you are not as flush with cash as you would like to be following Christmas, then it may not only be the freezing January weather leaving you feeling blue. Like the recent cold snap, the decision last week by the Bank of England to lower its base rate to the lowest level since the Bank's records began, may not necessarily have been warmly welcomed.
Whilst tracker rate mortgage customers may have been rubbing their hands in glee, spare a thought for those of us trying to build a nest egg of savings this winter, whether it be towards a first home, a wedding, a holiday or just some home improvements.
The reluctance of some mortgage providers to pass on base rate cuts is unfortunately and perhaps inevitably not an approach shared by savings account providers, who have recently clamoured to knock off some of the interest they are willing to pay savings customers. Happy new year indeed!
However, the outlook is not all doom and gloom. The savers' mantra has always been to look after the pennies & allow the pounds to take care of themselves. With this firmly in mind, it is worth considering that there are still competitive savings accounts on the market.
There are also a number of instant access accounts exclusively available to web customers, often known as e-Savers. 3 cracking e-Savers to consider that are available through Moneyextra.com with a £1 minimum investment are Birmingham Midshires 3.38% AER, Alliance & Leicester 3.60% AER and Abbey 3.5% AER.
Of course, the most tax-efficient way of saving is to use your ISA allowance. For the tax year 2008-09, the tax-free allowance for a Cash ISA is £3600. With the end of the financial year fast-approaching, why not compare the whole of market now by using Moneyextra.com's Cash ISA comparison tool.
Following a number of high profile banks' collapse, there are understandable nerves amongst savings customers when it comes to switching savings accounts for a better rate of interest. However, these customers may be buoyed by the news that the FSA has issued proposals that would see victims of failed savings accounts providers receive compensation for their cash within seven days. Some consumer groups have argued that the measures do not go far enough.
Further decisive legislation may materialise with the Conservative Party having last week pledged to abolish basic rate tax on savings account interest. It remains to be seen whether the government chooses to adopt the measures in time to be announced in the April budget, but with an increasingly large cohort of ageing baby-boomers and workers on fixed incomes, there would be no shortage of beneficiaries of such measures.
The two reforms could offer green shoots of recovery and make 2009 the year of the saver.
Moneyextra.com recommends you take independent financial advice before acting on any articleBack
2009-01-15 09:04:34 © Moneyextra.com