Money Saving Experts 'great savings rates'

sgl1965

Not sure I would describe 3% as a 'great savings rate' how about calling it a not too bad losing rate, put your money in our account and with inflation at 4.5% we guarantee to give you back 98.5% of whatever you invest...
What is the point of any 'savings' account that pays less than inflation?

Aegis

sgl1965 wrote: »

Not sure I would describe 3% as a 'great savings rate' how about calling it a not too bad losing rate, put your money in our account and with inflation at 4.5% we guarantee to give you back 98.5% of whatever you invest...
What is the point of any 'savings' account that pays less than inflation?

It's better than keeping it in a 0% current account and less risky to capital than investing to try beating inflation.

ChiefGrasscutter

If you think that is bad you should have been around in the 1970's.

Interest on savings accounts was small while inflation was running at around 25%.

thenudeone

sgl1965 wrote: »

What is the point of any 'savings' account that pays less than inflation?

Put it under the mattress then.

Do you think you will be better off?

opinions4u

When, at any time in history, has the best buy easy access account been 2.5% above the BofE rate?

Savers have never had it so good!

Sceptic001

opinions4u wrote: »

When, at any time in history, has the best buy easy access account been 2.5% above the BofE rate?

But then again, when has the BofE rate ever been been less than one tenth of RPI inflation?

MiserlyMartin

And when have interest rates been at 0.5% in the history of the Bank of England?

ScarletBea

Because my personal inflation rate is definitely not 4.5%.

dtsazza

sgl1965 wrote: »

What is the point of any 'savings' account that pays less than inflation?

Because it's better than the alternatives (e.g. a worse saving account paying 2%, or a current account paying 0%).

In many ways, inflation is a red herring. Regardless of what inflation is at, any money that you have available to save/invest should be worked to give you the greatest return according to your desired risk/access/etc. profile. 3% is always a better yield from saved money than 2%, which is always better than 1% - regardless of whether Cornflakes cost 2s. 6d. or £500.

(It is, however, an issue for those who need to buy cornflakes with their savings on fixed capital - e.g. pensioners, classically. It's also a political issue when it comes to prudence vs. imprudence, so I'm not saying it's unimportant. But if you have a certain amount available to save, you go for the best rate, regardless of what inflation is.)

Milarky

ChiefGrasscutter wrote: »

If you think that is bad you should have been around in the 1970's.

Interest on savings accounts was small while inflation was running at around 25%.

For one period of 12 months only (in 1975)!. The average rate of price increases for the years 1974 to 1981 on RPI was about 10% per year (giving a single doubling in that period)