What does 2022 have in store for savers? Inflation will continue to erode cash, but surely rates on offer can only get better…
Stashing away more money is a popular new year’s resolution, but as 2022 draws closer would-be savers could be forgiven for lacking the motivation.
現在のところ, leaving your cash in savings can make you feel like you’re actually becoming poorer by the month.
This is because the cost of living is vastly outpacing the returns savers are making.
Crippling costs: Inflation has reached the highest level it has been for 10 years driven on by soaring petrol, gas and electricity prices
現在, there is not one savings deal able to keep up with the eroding power of inflation.
11月現在, inflation reached 5.1 パーセント – the highest it has been in 10 年.
その間, even if a saver were to lock their money away for five years, the best interest rate they could secure is 2.1 パーセント.
The Bank of England expects inflation to stay around 5 per cent this winter and then surge yet further to 6 per cent in April, when the energy price cap also rises.
Savers who continue to keep their cash in easy-access accounts with high street banks paying as little as 0.01 per cent interest may well end up 6 per cent worse off year-on-year come April.
It will mean the spending power of £1,000 sat in an account paying 0.01 per cent interest will be diminished by £60.
And even for savvy savers holding their cash in higher interest-paying accounts, it is just a case of damage limitation.
The best easy-access deal is with Investec and pays 0.71 パーセント, whilst the best one and two year fixed rate deals with Gatehouse and Zopa Bank pay 1.41 そして 1.61 それぞれパーセント.
And inflation is not the only factor making that resolution to save more all the harder.
The pandemic has resulted in record levels of saving, according to the Bank of England’s figures, with many able to save more by working from home, travelling less and withdrawing from any form of social life.
How much money did Britons squirrel away in 2021?
Savers have stashed away more than £110billion since the start of the year, according to the latest Bank of England figures – though November and December are still unaccounted for.
It means Britons have been squirrelling away more money than any of their European counterparts since the pandemic began, according to analysis by the savings platform, Raisin, overtaking Germany as the savings champion of Europe.
Savings in the UK increased by an extra five per cent over the first half of 2021 compared to the same period last year, with British savers boosting their balances by £1,237 on average.
対照的に, savers from the Euro-area only grew theirs by an average of £691 per person during the same period.
フランスで, savings actually took a downward trend in the first six months of this year, with net inflows falling by four per cent.
If the threat of Omicron proves to be short lived and the UK enjoys a 2022 which is lockdown-free, saving will no doubt prove a harder discipline than it was for large parts of the previous two years.
しかしながら, if Omicron – or some other new variant – forces us into another lengthy lockdown, many people’s savings pots will stand to benefit.
UK savings accounts were boosted by an extra five per cent during the first half of 2021, with British savers adding on average, £1,237 to their balances.
But that was not true for everyone, with some having lost jobs or remained on furlough during periods of heightened restrictions.
Lockdowns were in many cases a blessing for savers who found they has less cause to spend
James Blower, founder of The Savings Guru says: ‘Covid will continue to impact life generally in 2022 and this will mean there will be winners and losers, with some people seeing their savings bolstered and others being negatively impacted, particularly those on lower wages.
‘Covid was polarising in 2021 and it will continue to be so in 2022 – at least until we get out of winter.’
Will rates improve in 2022?
Although they remain in the doldrums, savings rates did increase in 2021 – but only for those who held their money with smaller providers rather than the big banks.
Challenger banks jostled for customers and led the way on the rate recovery – the best easy access rate went from a low of 0.41 per cent to a high of 0.75 per cent whilst the best one year fixed rate deal went from a low of 0.56 パーセントから 1.51 パーセント.
残念ながら, few of these deals remained on the scene for long before they were pulled.
The destiny of savings rates in 2022 is largely in the hands of the Bank of England’s Monetary Policy Committee.
If inflation rises further, it is likely the Bank of England will respond by upping the base rate in an attempt to claw it back to its long-term target of 2 パーセント.
The Bank of England responded to November’s inflation figures by raising the rate from 0.1 パーセントから 0.25 パーセント, the first rate rise in almost three and a half years.
The central bank’s chief economist Huw Pill has since warned that further base rate rises may be needed.
Likewise, some economists now expect a series of rate rises next year.
Ruth Gregory, senior UK economist at Capital Economics, forecasts rates hitting 0.75 のパーセント 2022, and George Buckley at Nomura predicted rates would be 1 per cent by the end of next year.
Although it is doubtful savers will see any benefit from the most recent base rate rise, further rises next year should help to push savings rates upwards.
Inflation is expected to reach as high as 6 per cent in April when the energy price cap rises
Two respected experts within the industry, Anna Bowes, co-founder of Savings Champion and James Blower, founder of The Savings Guru are both optimistic.
Blower says: ‘The base rate rise today won’t be passed on to savers, but if we see significant movement in the base next year – perhaps a return to a base rate of 1 per cent or more, then this will be good news for savers and help to push up rates.
‘But the base rate will need to get above 0.5 per cent before we see even a proportion of any increases starting to be passed on to savers.’
Bowes adds: ‘There is definitely a feeling that 2022 will be a better year in terms of savings rates – not least because we are expecting at least one base rate rise.’
It is therefore expected that savers will need to be patient, with rates expected to rise at a very slow pace.
‘Those savers hoping for 1 per cent on easy access or 2 per cent on a one-year fix are likely to be disappointed,’ says Blower. ‘But rates will start to head towards those levels during the year.’
‘It’s really hard to predict exact numbers but my expectation is that the best easy access rates will be around 0.9 に 0.95 per cent by the year-end and the best 1 year fixed rate deal will be circa 1.75 に 1.8 パーセント。’
Ditch the big banks for the best returns
If rates start to rise and inflation eventually begins to fall, then the outlook come the end of next year could be more cheery for savers.
They will benefit the most if they are proactive and seek out the best deals on the market, rather than leaving their cash stagnating with high-street banks.
UK savers have £967.4billion in easy access accounts, and the big banks paying a pittance hold around two-thirds of the balances.
Research from Paragon Bank shows there is some £424billion in easy-access accounts where savers earn 0.1 per cent or less, whilst there is also £256 billion sitting around in current accounts earning no interest at all.
This is Money’s independent best buy savings tables can help savers pick the best deals on the market and at least get some form of return – though it might require choosing a niche provider they have never heard of.
To get the best returns, savers must ensure their cash is not languishing in high street accounts and instead look for the higher-interest deals with smaller providers
They may not be household names, but all the banks and building societies included on our lists are registered with the Financial Services Authority and signed up to the Financial Services Compensation Scheme.
This means savers’ money is either directly protected up to £85,000, or indirectly protected via its passport scheme where the compensation limit depends on the bank’s home country. For banks based in Europe it is €100,000.
It is also important to point out that our tables are unbiased – we simply put the rates in order of the interest they pay, regardless of any affiliate link.
Bowes says: ‘A number of providers – not the big banks funnily enough – have expressed that they will be looking to raise funds from savers so competition will hopefully be strong.
‘This means better rates will be available for those who are prepared to shop around and potentially use a provider that they have not heard of before.
‘As long as they make sure that the banks are fully regulated and the savings products they are advertising are cash savings accounts and therefore covered by the Financial Services Compensation Scheme, there’s no reason to shy away.’
Choosing the right provider is important, but the type of account you opt for is arguably even more crucial, particularly if you may require access to your savings at any given time.
‘Easy access accounts tend to offer the most flexibility, which in these uncertain times may well still be a priority for many,’ says Eleanor Williams, a finance expert at Moneyfacts.
'しかしながら, those who are comfortable locking their savings pot away for a set period may find that they can receive higher returns from a fixed-rate bond.
‘As the rate is fixed at the point of investing for however long the account is set to run, these can be a good option for savers who are happy to secure their cash away to receive guaranteed return.’
She also urged savers to be aware of the £1,000 personal savings allowance, which means they pay no tax on savings interest below that level.
While Isas offer tax-free saving of up to £20,000 per year, the interest rates on those accounts might be lower.
‘Those looking to utilise their Isa allowance may wish to think about any personal savings allowance remaining, especially when comparing fixed rate options, as interest rates between the top fixed Isa and non-Isa rates can vary,’ ウィリアムズは言った.
What else can savers do to boost their pots?
Another option for those looking to eke a little more out of their rainy day fund is to sign up to a savings platform.
They could consider savings platforms such as Raisin or Hargreaves Lansdown, or a digital savings platform like Plum or Chip, which not only can help savers to effectively manage their savings can also on occasions offer welcome bonuses or special rates when joining.
例えば, Raisin is currently offering a welcome bonus giving savers the chance to boost their savings by £50 when they open and fund an account on its marketplace with a minimum of £10,000 – although it’s worth noting that the bonus only applies to one’s first savings account with the platform.
Signing up to a platform could boost savers’ returns through sign-up bonuses
It may not sound like much, but adding the £50 bonus to their total annual return offers savers a chance to effectively leapfrog the best savings rates.
あるいは, for those with sufficient savings in a rainy day pot safely held in cash who have have extra funds they will not need in the short term – they could take some risk and invest for higher returns instead.
例えば, a simple tracker following the UK stock market, the Vanguard FTSE UK All Share fund, is up 15.7 per cent over 12 月, while HSBC’s FTSE All World Index global tracker fund is up 20 per cent over the past year.
Should savers gamble on accounts offering a monthly prize draw?
With rates so low, some savers are opting for accounts that pay no interest, but instead offer them the chance to win big in monthly prize draws.
But as This is Money revealed earlier this year, the chance of being one of the lucky winners is slimmer than many of those who stash their savings away in lottery-based accounts might realise.
The most popular prize draw account is NS&I’s premium bonds. Research published in October found that someone with a £1,000 holding would wait 213 years for a better than 50:50 chance of winning even a £50 prize.
Timothy Davies is 61 and lives in Llanelli with his partner, Amy and his daughter. He has worked as an HGV driver for over 40 年.
But for a lucky few, the gamble does pay off. 例えば, in August a Premium Bond holder from Devon saw their £1,001 holding scoop the £1 million jackpot having purchased the bonds only a year before.
And recently a Welsh HGV driver from Llanelli couldn’t believe his luck when a bank staff member in Halifax’s Llanelli branch told him he was the winner of its £100,000 prize.
Timothy Davies, who has been an HGV driver for over 40 years said: ‘I have never won anything in my life and I never thought I stood a chance of winning. I am shocked and completely over the moon – my partner didn’t believe me!’
Although Halifax, 全国, TSB and the Family Building Society all have their own take on monthly prize draws, NSI’s premium bonds remain the one at the forefront of British hearts and minds.
Last month NS&I celebrated its 65th birthday as the first ever Premium Bond was purchased on 1 11月 1956.
There are now 21.1million Premium Bond holders – not far off a third of the UK population – holding between them over 113billion eligible £1 bonds.
This is Money revealed 65 facts that Britons might not know about the country’s best loved savings product, including the fact that £17 is the smallest ever holding to win the £1 million jackpot.