Those looking for income from their savings face an uphill challenge, with banks and building societies making swingeing cuts to the interest paid on leading accounts.
This latest round of rate reductions was started by National Savings & Investments (NS&I), which has imposed brutal cuts to some of its most popular accounts. The interest paid on its NS&I income bonds, for example, has fallen from 1.15% a month to just 0.01%. Returns on ISAs and Premium Bonds have also been squeezed.
A wave of similar reductions has spread to the high street with newer providers such as the online Marcus Bank, as well as more established names like the Coventry and West Bromwich Building societies, cutting rates and, in some cases, removing accounts altogether.
Income seekers prepared to take more risk with their money also face difficulties. At least 35 FTSE 100 companies have cut, cancelled or suspended their dividend pay outs this year. In many cases this is because revenues have been hit by coronavirus lockdowns – meaning fewer surplus profits to distribute to investors.
Savers looking to boost returns need to be nimble when it comes to snapping up best-buys; good rates do not tend to last long. For example, the Skipton Building Society launched a best-buy easy-access account earlier this autumn. Demand meant it closed to new customers after just 48 hours.
Savers need to consider all their options. If you can afford to lock your money away you may get a slightly higher rate from a fixed-term bond, although this risks tying up your money at a time when interest rates are at an all-time low.
The value of your investment, and the income from it, can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.