Three years at 0.5%: how has the base rate hit banking?
Published 6 March 2012 by Daniel Culpan
It's been three years since the Bank of England dropped interest rates to a record low of 0.5%. Buy just how has this affected banking customers?
This week marks the third anniversary of the base rate being held at a historic low of 0.5% - but just how has this affected banking customers in the past three years?
The Bank of England dropped the base rate to 0.5% in March 2009 - the lowest rate seen since the Bank was founded in 1694 - in an effort to encourage borrowing and revive the economy. However, as This is Money reports, these record low interest rates have left savers a total of £76 billion out of pocket - suggesting it won't be an anniversary most savers will be fondly celebrating.
Since the fall in interest rates, the average rate of interest paid on savings by banks, building societies and government-backed National Savings & Investments has been just 1.26%. And most bank accounts have offered an even lower return.
Jason Riddle, of Save Our Savers, commented that low interest rates have had a huge negative impact on people looking to get good returns on their savings pots. He said: "Saving is about self-help and personal responsibility. The Government has turned on savers and is penalising them for their responsible behaviour by plundering their savings to pay for the banking crisis."
With no indication that the Bank of England is set to rise interest rates anytime soon, many banking customers will continue to face an uphill struggle to see their savings grow - unless they look for the best deal on a high-interest savings account, such as a fixed bond.
Meanwhile, most bank accounts offer very little or no interest at all. However, there are other types of account which, although they don't pay interest, come with other benefits that may prove attractive for banking customers in the current climate. For example, some accounts can help you to budget for your monthly bills and enable you to keep an eye on your balance using SMS and online services, like the thinkmoney Current Account.
Quick and easy to apply
Apply for a thinkmoney Current Account today.