In February, Moneyfacts recorded just 12 savings rate rises. Disappointingly, rate reductions over the same period completely outshone this figure, with the number of rate decreases over the month standing at a staggering 235, with some deals falling by as much as 0.74%.

While this is certainly bleak news, at least savers’ precious funds won’t be greatly affected by inflation: inflation statistics released today show that the Consumer Prices Index (CPI) stuck at 0.3% during February, which means they have little to worry about in terms of savings erosion. Unsurprisingly, the vast majority of the 814 savings accounts currently on the market can beat or match inflation, and of these 648* (144 no notice, 72 notice, 237 fixed rate bonds and 195 cash ISAs) are without restrictive criteria*.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:

“Any hopes of an improvement in the savings market have been dashed – according to our data, for every rate rise in February there were approximately 20 rate cuts.

“Thanks to the Bank of England base rate remaining at a record low for seven years, the Government’s Funding for Lending scheme and low SWAP rates, savers are really starting to feel the pain. For example, seven years ago the top two-year fixed rate bond paid 4.18% yearly, but savers fixing today for the same term would get a rate that is 1.43% lower.

“The ISA market has fared little better – indeed, February saw a shocking 69 reductions, meaning ISA season has morphed from a period of rate rises to a time of rate cuts. Indeed, over the last two years the average easy access ISA has fallen by 0.19% to an all-time low of just 1.05%.

“There are no signs of an end to this downward spiral, either, so savers need to act fast to make their savings work hard for them. Today there are 131 accounts that pay 0.50% or less, and while savers know they are facing hard times they should not let their money languish in poor paying accounts - there are definitely better deals out there.

“Nevertheless, a lack of competition in the market means that the likelihood of a savings revival is poor. The new savings initiatives are a welcome gesture but savers will need more than this to make them see some light at the end of the tunnel.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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