Average interest rates on cash Individual Savings Accounts have fallen to an all-time record low, pushing investors into shares instead, says Banc De Binary, the stockmarket trading firm.
Average interest rates on cash in Isas have fallen to just 1.09 per cent, down from 1.85 per cent a year ago.
This means that Isa savers are now on average earning far less than inflation, even when tax breaks are taken into account.As a result, more savers are looking to put their money into shares, which tend to be higher risk as highlighted by dramatic falls in share prices last month as a result of fears over the growth prospects in emerging markets.
Oren Laurent, CEO of Banc De Binary, said: “Savers in the UK have borne the brunt of the damage caused by interest rate policy since 2008, and the only options for them at present are to shift their cash into higher-risk, higher-yielding investments or see their money slowly eroded.”
Many experts have blamed low interest rates not just on Bank of England policy but also on the ability of the big banks to raise capital through the Funding for Lending scheme, which means they have less need of depositor cash and can pay a lower rate of interest than in the past.