No Decent Rates for Instant Access Accounts

Written by Karen Bryan

£1 coin pileWith only a few weeks to go until the 12 month bonus on my Halifax Reward Saver expires. I’m searching, most likely in vain, to find an instant access savings account paying a decent rate of interest.  The Reward Saver is currently paying 2.5%.

I opened a Halifax Everyday Saver account in April this year, which is still paying 1.5%, made up of a 12 month fixed rate bonus of 1% and a variable rate of 0.5%. We’re already up to the £20,000 threshold, which pays 3% variable, in our joint Santander 123 Current Account.

The highest rate I can find is a meagre 1.75% variable on the ICICI Bank HiSave Account.  That means that after deduction of 20% income tax, we’d be left with a 1.6% return. As the rate of inflation, measured by the  Consumer Prices Index (CPI), stands at 2.9%, our savings would losing 1.3% in spending power after one year.

I’m not sure if it’s worth opening the ICICI  HiSave SuperSaver account for the extra 0.25% gross  interest, which equates to 0.2% extra after paying the basic rate of interest. The ICICI rate is variable, therefore by the time I shunt the money into the new account, the rate of interest paid may have dropped.

Earning such pathetic rates of interest does make you question whether you it’s worth saving. It was a factor in our decision to replace our car recently. Skoda were due to withdraw their Zero VAT offer, our old car needed quite a bit of work done on and the deprecation fund we’d set aside to cover the car replacement cost was about to start losing spending power with the lower rates of interest paid on our savings.

Interest rates correct on 25 July 2013