The Bank Rate is similar to what it was in 2009 – but the returns for savers are very different
Banks are paying savers lower returns than in 2009 even though the base interest rate is higher than it was back then, and Britain’s favourite savings institution is a huge reason why, new data has shown.
The Bank Rate is currently 2.25pc, up from 0.1pc in December, with another potential percentage point increase expected in the coming week. The last time the Bank Rate was near this was at the beginning of 2009 – when savers could earn up to 6pc from their nest eggs, according to Moneyfacts, a data firm. Now, the best buy account pays just 2.25pc. In January 2009, average rates on cash Isas were 4.5pc, compared with 2.1pc now.
Savers who put £50,000 in the top easy-access account in 2009 would have earned £3,000 a year in interest. Today, the top easy access account would pay just £1,405 a year – meaning that savers are worse off by £1,595 even though the Bank Rate is at a similar level.
While banks have slowly passed on the benefits of a rising Bank Rate, other factors influence whether they choose to do so.