Savings rates hit new lows as it gets harder to beat inflation

AVERAGE returns on savings accounts continued to fall in Decmber, making it even harder to beat inflation, Bank of England figures show.

Data on deposit rates from the Bank for December 2016 reveal average returns on instant access accounts have fallen from 0.25 per cent in November to 0.15 per cent in the last month of the year.

Variable rates on cash ISAs are now 0.43 per cent, down from 0.59 per cent in November and well below a high of 0.88 per cent in August 2015.

Fixed-rate cash ISA savers are getting on average 0.85 per cent for a one-year term, or 0.71 per cent for two years. In comparison, the average for a two-year fix was at a high of 1.59 per cent in January 2015.

Fixed rate bonds on average are offering rates of 0.64 cent for a year, one per cent for two years or 1.23 per cent for three years.

These are all below the current consumer prices index of 1.6 per cent.

Read more: Overcoming inflation

“Average returns on savings have fallen even further, to a new low,” said Rhydian Lewis, chief executive of peer-to-peer lender RateSetter.

“With savings accounts paying very close to zero interest and inflation outstripping average returns several times over, it’s clear that anyone looking to make a meaningful return on their money must look elsewhere, at products which carry risk but also offer a greater return.”

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