A recession is a difficult time for everyone but for 47% of the British population who regularly save an average of £209.23 per month, they are suffering a very raw deal. These individuals are constantly being punished for responsibly managing their finance so they could save a tidy sum for a rainy day. They are now finding that the money they so diligently saved is now worth a fraction of what it was.
Savings accounts interest rates have dropped drastically in the last year as the recession started to bite (Making it easier to find the best savings rates.). Regular Savers have found that unless they had fixed their savings interest rate they would soon start to see their income dwindling fast. Leaving many who are dependent upon their savings for an income facing poverty and 15 million people (32%) stating that they did not have enough money to cope in an emergency. Now in order to receive a rate even remotely similar to those available last year for the best savings accounts or savings bonds, savers have to consent to lock away their savings for a fixed period usually starting with a year, withstand penalties on withdrawals made above the agreed amount, withstand a loss of the incentivised bonus and interest if the customer needed access to their savings at short notice.
Recent research from Moneyextra.com has supported this statement by showing the average AER of an Instant access savings account with a £1000 balance is only 0.49% which narrowly undercuts the bank of England base rate of 0.50% and an ISA with a balance of £3000 has the average AER of 1.30%, these are the best savings rates available of late. The choice has become distinctly limited. If customers are happy to have their saving locked away for a fixed period there are some good rates for you out there. Moneyfacts recently reported that the number of fixed rate bonds paying more than 4% have jumped to more than 104.
On the upside the recession has encouraged the British population to take more care of their finances. According to a survey by Friends Provident, the recession has prompted a "rise of financial rationality" with almost a third of Brits being more careful with how their money is spent and 33% are saving more since the beginning of the recession. The NS&I Quarterly Saving Survey has shown that the amount the average British adult is setting aside to save has risen to £92.41 in Spring 09 from £90.12 in Winter 08-09. This is an average of 6.83% of their income each month during spring.
When your searching for a savings account, it's important that you shop around to make sure you find the best savings rates. Price comparison sites are perfect for comparing different products from different banks. In addition, always take into account the penalties and bonus' the savings accounts or bonds have and make sure that these fit with how you normally manage your savings account. Fochange and they establish a new standard of living based on the remaining income.