Scary days ahead?
For all you readers who don’t live in Britain, we’re in a bit of a financial mess at the moment. Oh yes, we’re stood cowering behind Greece and Spain hoping that no one will notice us as the economic steamroller approaches. Interestingly, our government has let the banking sector continue as they did before…
Anyway, UK newspaper The Times has an interesting article on how approaching inflation is going to affect the British saver:
Savers are being hammered from all sides with £1 billion wasting away in accounts that do not pay enough interest to keep up with rising prices, according to research by Candidmoney, the personal finance website. To compound this, hundreds of thousands of people are also languishing in “legacy accounts” which pay next to no interest at all.
Someone who pays income tax at 50% must now earn at least 10.6% interest on their savings just to break even. A 40% taxpayer must earn 8.8%, while a basic-rate taxpayer needs about 6.6%. There are currently no accounts paying this level of interest, unless you fixed at this rate in previous years. Halifax, for example, had a four-year fixed-rate deal paying 6.6% in August 2007. The highest-paying savings accounts today are paying about 5% — but only if you lock away your money for five years.
You can read the full article here.
