Tesco internet saver rate dropped from 3.25% to 3% from 16 April

oldfella

There is no difference in real terms between, say, being paid 5% interest where inflation is 4% and being paid 1% interest and topping that up with 4% of your capital where inflation is 0%. The only issue is that you have to keep a portion of your savings in an account that permits such withdrawals.

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point taken.

my personal view is that interest on savings broadly pays for inflation, the savings provide a long-term cushion.

I protect my income through dividends - the capital is down some 25% over the last year, but still higher than cost, and the yield is still OK. Hopefully the next few years will see the market swing back.

sabretoothtigger

Theres no rule that says people have to take rpi as their most relevant gauge to inflation in their own spending. cpi is probably more applicable to many

If income falls and outgoings rise then theoretical measures are of little comfort

bagsacash

RPI doesn't include house prices, but it does include mortgage interest.

Housing costs is what I meant to say

IMHO, CPI is a useless measure of inflation. If you want a figure that excludes mortgage interest, then there is the RPIX, which is currently at 2.5%, down from highs of around 5.5%.

If your name is Gordon Brown or his advocate the cpi is usless, yes, and you just watch Gordon switch to using CPI when BoE interest rates rocket along with morgage interest.

That suggests you'd need to shave up to 3.5% off historic rates in order to compare like for like. So that 3% from Tesco would still be equivalent to 5.5-6.5% offered in the recent past.

My isa was paying 6% and my savings were paying 5.7% and there were better rates to be found, in fact tesco were paying 6% less than 12 months ago

masonic

bagsacash wrote: »

If your name is Gordon Brown or his advocate the cpi is usless, yes, and you just watch Gordon switch to using CPI when BoE interest rates rocket along with morgage interest.

That is a very odd opinion to hold, given that CPI is the Government's official benchmark for the cost of living. It seems to me that only GB and his advocates actually still support the measure - even the MPC seem to have been ignoring it recently.

Personally, I experienced a sharp increase in my outgoings over the last couple of years that wasn't reflected in the CPI, and now I'm experiencing prices levelling off and in some cases getting cheaper, which isn't reflected by the CPI. For me, RPI has matched my personal situation much more closely than CPI.