Rollercoaster ride for savers in 2006

If you were a saver in 2006, your head might have been spinning, as there were many ups and downs during the year. As Moneyfacts points out, more than 40 savings institutions reduced interest rates, some by as much as 0.5 per cent. This all started to change as the Bank of England increased the base rate by 0.5 per cent and savings rates started to pick up again, in many cases putting savers right back where they started.

A joint survey between the financial comparison site and the BBC showed that open issue bank and building society accounts rose by an average of between 0.38 per cent and 0.41 per cent, which is 0.1 per cent less than the base rate. ISA holders had an average increase of just 0.42 per cent.  Best buy savings tables show a completely different picture, however. Market leading savings providers had rates that rose by between 0.53 per cent and 0.68 per cent during 2006.

What this means is that consumers who take the time to look around for the best rates and switch to take advantage of the best deals could earn even more on their savings than the base rate rise. However, keeping savings in low paying accounts might mean a poor rate which makes the gap between the best and worst savings accounts wider.

The advice from Moneyfacts’ Lisa Taylor is: ‘With such a mixed year for savers, it is even more important that you check you are still receiving the best deal and that your rate continues to remain competitive.  Don’t assume that because your savings account is a tracker or has a rate guarantee linked to base, you will automatically receive the full benefits of any rate change. This has certainly not been the case for many savers this time round. If you find your savings sitting in a poor interest paying account, vote with your feet, there are some great deals to be found!’