Savers already struggling to generate returns due to record low interest rates have been dealt another blow with the news that at least 12 best buy deals were recently withdrawn or altered in a single week.
Andrew Hagger of Moneynet.co.uk said that in the seven days from May 28th, financial institutions including Barclays, Nationwide, Northern
Rock and Chelsea Building Society either scrapped market-leading products or "slashed" their returns.
ISAs and fixed-rate bonds were among the savings vehicles affected by the changes.
He added that consumers coming off fixed-rate products offering up to seven per cent annual interest who are looking to reinvest will be forced to join the "hoards of other customers chasing a handful of half-decent accounts".
Category Archives: Savings and Investments
Savings deals disappear
ISA sales up
ISA sales recorded their best April since 2001 this year, according to the latest statistics from the Investment Management Association (IMA).
Net inflows into the accounts stood at £1.2 billion during the month, up 63 per cent from the £700 million in sales seen during the corresponding period of 2009.
Compared with March, ISA investment was up 56 per cent from £604 million.
The IMA said that overall, the 2009-10 tax year, which came to an end on April 6th, saw the highest ISA sales since 2001-02, with savers putting aside £3.5 billion in the accounts.
This marks a sharp turnaround from the preceding five years, when withdrawals had exceeded new allocations to stocks and shares accounts.
Savings suffer
Savings were a "major victim" of the credit crunch, according to a new report.
The study by Unbiased.co.uk found that the amount consumers were putting away each quarter dropped from around £38.7 billion between April and June of 2008 to £19.9 billion between July and September – and
levels "haven’t recovered since".
In the first quarter of 2010, total saving stood at £16.5 billion, the site added.
Meanwhile, the picture for borrowing has undergone a "dramatic change" since mid-2008.
Back then, Britons were repaying £1.67 of debt for every pound saved. During the first quarter of this year, they were borrowing 37 pence for every pound saved.
However, this is down from borrowing 60 pence for every pound saved in the final three months of 2009.
86% to review savings
Some 86 per cent of savers believe it is important to review their savings given the low interest rates currently on offer, a new survey has found.
This is up from 67 per cent in October 2009, according to the poll by the Fair Investment Company (FIC).
Among those looking to review their savings, 78 per cent said they want to achieve better growth, up from 53 per cent in the previous survey.
Meanwhile, the proportion searching for increased income has dropped from 47 per cent in October to 22 per cent now.
George Ladds, the FIC’s head of pensions and investments, said it is not surprising that so many savers are looking to review their investments, given that the Bank of England’s base rate has now been at its all-time low of 0.5 per cent for 15 consecutive months.
Child Trust Funds scrapped
State contributions to child trust funds (CTFs) will end by January 2011, the Treasury has announced.
The government will introduce legislation to start phasing out the £250 vouchers given out at birth and top-up payments made after seven years from August.
Chief secretary to the Treasury David Laws said the move would save £320 million in 2010-11, climbing to £520 million in 2011-12.
A poll conducted by F&C Investments showed that 70 per cent of parents with children aged eight and under plan to carry on saving for them even if the abolition of the CTF is approved by MPs.
Every child in the UK born on or after September 1st 2002 was eligible for one of the accounts.