THE TELEGRAPH: Savings accounts will become “totally obsolete” if inflation rises next week, experts have warned.
Latest figures suggested that not a single saver in Briton would make a real return on their cash if the cost of living continues to rise.
Historically low interest rates and the government’s preferred measure of inflation, the Consumer Prices Index, at 3.2 per cent means savers are already struggling to get an income.
There are currently no accounts available to higher rate taxpayers that provide a real rate of return after tax and inflation, and just a handful available to basic rate taxpayers. But even these could be nudged off the savings landscape, financial experts warned.
They suggested that if CPI rises to above 3.8 per cent, there will be no point any taxpayer using a savings account to produce an income.
In this situation, savers would actually end up losing money and could end up being more than £300 out of pocket in a year on a £10,000 investment.
Darren Cook, of personal finance website Moneyfacts, said: “If inflation rises to 3.8 per cent, all savings accounts will effectively be totally obsolete. >>> Myra Butterworth, Personal Finance Correspondent | Friday, August 13, 2010
