Despite Interest Rate Rise, Savers Are Still Losing Out

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January 12, 2022 - Furnley House

Despite Interest Rate Rise, Savers Are Still Losing Out

The Bank of England increased the Base Rate to 0.25% in December. Whilst lenders have been quick to charge the higher interest rate to borrowers on variable rate mortgages, many banks and building societies have yet to increase the interest rates they pay to savers.

Research by the Mail on Sunday revealed that savers in easy access accounts are on average currently receiving a quarter of the interest they were getting when the Bank of England base rate was last at 0.25 per cent for a sustained period – from August 2016 through to November 2017*.

Five years ago interest on average for easy access accounts was 0.37 per cent, but most recent official figures show it has fallen to just 0.09 per cent.

What does this mean for savers?

Those who have cash held in savings accounts have had it tough in recent years. Interest rates have reached historic lows, which means very little interest has being paid on money held in savings accounts.

Added to this is growing concerns about the cost of living in the UK, something often referred to as inflation. With the price of fuel, groceries and house prices rapidly climbing, money held in cash savings is not keeping up. £10,000 could go a lot further ten years ago than it can today. This means money held in cash savings is eroding in value as the cost of living keeps going up.

What should savers should be considering?

According to the comparison website Moneyfacts, there are no savings account currently available that offer an interest rate that beats inflation. This means that money held in cash savings accounts is eroding, and interest paid on these accounts is not enough to curtail the problem.

Good financial planning has always been based on holding at least three months salary in accessible savings. Like so many aspects of life, the best course for stability is about having balance.

If you are holding large amounts of cash savings then it could be worth considering the alternatives. This means considering a blend of investments in a portfolio which meets your attitude towards taking risk and your long term goals. For many people, this goal can be as simple as preservation of capital, taking a low risk approach to investing, but with a growth target of at least keeping up with inflation.

We are here to help.

We have a team of highly qualified and skilled independent financial advisers who can help you to review your savings and investments. Whether you are a first-time investor or you need help reviewing a wider financial portfolio, our experts can guide you through the process. To find out more call 0116 269 6311 or email



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Past performance is not a reliable indicator of future performance.

The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

All Information correct at the time of writing