Low rates, combined with rising inflation means millions of savings accounts are now effectively worthless once the tax on in the interest they pay is taken into account.
Yesterday, it emerged that the key Consumer Prices Index (CPI) measure of inflation had risen to 1.5 per cent last month, up from 1.1 per cent in September.
According to the personal finance website Moneynet, it means that basic rate taxpayers need a rate of 1.875 per cent on their savings before they begin to see a real return, while higher rate tax payers need to earn 2.5 per cent.
For basic rate taxpayers, only one in five variable rate savings accounts pay sufficient interest for them to enjoy a return on their money.
The figures are a fresh blow to savers who have seen their rates of return plummet as interest rates spiralled towards zero per cent.
A spokesman for Moneynet, said: “If inflation continues to rise, savers will find it increasingly tough to get a real return on their money. It’s a miserable time for those working to put some money aside and this looks like it is not going to get any better in the months ahead.
“Given the situation, there’s almost no incentive to save any money.”
In the current situation real assets such as gold and silver have performed far better than a standard savings account
Read More: Telegraph
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