Savers suffer worst year on record as rates plunge to 0.01% during Covid pandemic

Savers have suffered their worst ever year after rates plummeted during the pandemic.

Money Mail analysis reveals they have forfeited an estimated £3.55billion in interest as a result.

The rates massacre began after the Bank of England slashed its base rate to 0.1 per cent on March 19 last year, the lowest in its 327-year history.

Since then easy-access rates for existing savers have tumbled from an average of 0.5 per cent to just 0.1 per cent.

The rates massacre began after the Bank of England slashed its base rate to 0.1 per cent on March 19 last year, the lowest in its 327-year history.

Even new savers, who usually get a better deal, now earn an average of just 0.16 per cent, according to data analysts Moneyfacts. Most major high street banks pay an even worse 0.01 per cent.

And there is not a single easy access account that beats inflation.

Had the average interest rate remained at 0.5 per cent, savers would have earned £4.44billion in interest on the £888billion stashed away in easy access accounts over the year.

Instead they will pocket £888million – a £3.55 billion loss.

And the true loss of interest will be even higher as those with money in fixed rate accounts approaching maturity have also suffered terrible rate cuts.

Savers also have much less choice after banks and building societies raced to pull deals. The number of savings accounts on offer has dropped from 1,768 in March 2020 to another record low of just 1,385.

In a further blow, National Savings and Investments (NS&I) cut its interest rates to as low as 0.01 per cent in November, adding to a customer service crisis at the Treasury-backed bank 

James Daley, of consumer group Fairer Finance, said: ‘Even before the pandemic, it had been a disappointing decade for savers. However, this has been a terrible, terrible year for them.’

In a further blow to savers, National Savings and Investments (NS&I) cut its interest rates to as low as 0.01 per cent in November. The move added to a customer service crisis at the Treasury-backed bank as customers rushed to withdraw a record £9.5billion over the following three months.

The endless rate cuts over the past year are particularly galling for those who have put aside more cash during lockdown.

It is estimated the nation will have saved an extra £180billion by the summer because they have been unable to socialise or go on holidays.

Anna Bowes, of website Savings Champion, said: ‘It is ironic that at a time when some have the opportunity to save for the first time, there are very few options out there.’