Brits have been forced to get money-savvy amid price hikes and austerity measures, with the desire to make savings coming high up on their list of financial priorities.
According to the Lloyds TSB Savings Index, more than 85% of Brits said that it was important to make regular savings, while 78% said they try to save any spare money. Compare savings accounts
However, the Government is not making it easy for consumers to get stuck into this savings culture, with the Funding for Lending scheme blamed for a further string of cuts to interest rates.
Over the course of the month, 16 banks and building societies slashed rates on 100 savings accounts.
In the previous month, 10 providers cut rates on 24 accounts, and in January last year just two banks reduced interest rates on 11 accounts.
The size of rate cuts has increased, as well as the number of banks reducing savings rates: last month the average savings rate was reduced by 0.34 percentage points, which jumped to 0.4 percentage points this month.
Since it offers banks and building societies access to cheap money to fund mortgage
lending – thus reducing competition between banks to obtain deposits from ordinary savers to fund such lending – the Government’s Funding for Lending Scheme (FLS) has been blamed for the plummeting rates.
Ros Altmann, the director-general of Saga, said: “It has been obvious for some time that policymakers don't care about the suffering of savers.”
This follows the news that the interest rate on a best-buy ISA has tumbled to below 3% for the first time since the late 1990s.
Coventry Building Society’s ISA, paying 3.10%, was recently pulled and replaced with a new deal offering 2.8%.
The bad news doesn’t stop there for savers: the next best ISA was withdrawn soon after, with M&S no longer offering their rate of 2.75%.