Savers miss out on hundreds after four years of record low interest rates

Thursday’s decision to keep base rates at 0.5% means that interest rates have been at a record low for four full years.

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The Bank of England’s Monetary Policy Committee decided this week to keep the base rate at 0.5%, completing four years at this historic low level.

This is a further blow to savers, who are facing an ongoing struggle to build up a nest egg in the current economic climate.

According to HSBC’s Annual Savings Report, 40% of Brits now squirrel away a regular sum of money each month, compared to 28% in 2011.

However, the rise in the number of people making savings is contradicted by plunging interest rates, which could have cost savers hundreds of pounds in lost returns.

This is according to new figures from Wesleyan Assurance Society, which found that a saver with £5,000 could have made losses totalling more than £400 in gross interest over the four year period.

Wesleyan analysed the difference between keeping money in an account paying interest at the base rate of 0.5% a year compared to one paying 2.5%.

For those who had built up a savings pot of £100,000 before interest rates plummeted, the potential loss of gross interest could be as much as £8,366.24.

Samantha Porter, Wesleyan's Sales and Marketing Director, said: “Making sure savings are working as hard as they can is often at the bottom of people's priority list.

“Our calculations show that failing to shop around for the best deal can have a significant impact on savings. With many people keeping their money in accounts paying just 0.5% a year or less, savers could have missed out on considerable sums in lost interest over the past four years.”

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