UK SAVERS are losing more than £1bn in income from their bank accounts each year, according to research from EasyMoney, part of Sir Stelios-Haji-Ioannou’s easy family of brands.
The recently-launched peer-to-peer lender said on Saturday that this represents a 16 per cent annual loss in income – caused by a combination of poor interest rates and rising inflation.
By comparison, the platform is offering annual returns of 7.28 per cent via its ‘balanced’ Innovative Finance ISA.
“Savers are increasingly fed up with seeing their money just sitting doing nothing in bank accounts,” said Andrew de Candole, chief executive of EasyMoney.
“It’s easy to see why: these figures show that savings accounts’ and cash ISAs’ performance has been getting worse. With inflation eating away at values, the reality is there’s very little incentive to save through these traditional routes.”
The bank account figures were gathered between 2014/15 and 2015/16 and found that the total amount of interest received from UK bank accounts fell from £6.8bn to £5.7bn during this period. However, de Candole warned that the loss of income could be even higher in real terms, once the latest inflation figures are taken into consideration. At the end of the 2015/15 financial year, inflation was -0.1 per cent, but it hit three per cent in January 2018. This could translate to an even greater loss of income for savers using low-interest bank accounts.
“For many people the time has come to take action,” said de Candole. “At EasyMoney, we think some real choice in the market is long overdue. Investors need products that offer real returns, and many are prepared to accept a sensible, calculated increase in risk in order to achieve this.”
EasyMoney launched its first IFISA in February 2018, offering everyday investors a target of 4.05 per cent in annual interest. Last month, the platform launched a ‘Balanced’ IFISA product, with target returns of 7.28 per cent per year.
“IFISAs have a very different risk profile to traditional bank accounts or ISA products which offer a £85,000 government guarantee,” added de Candole. “However, for those who are prepared to accept more risk for a higher potential return, they offer investors a great alternative.
“Of course, savers will want to weigh up the pros and cons of different types of ISAs and every individual’s risk appetite is different. But for many it’s becoming clear that there are significant drawbacks even with traditional savings accounts.”