On 1 August last year the Bank of England's Funding for Lending scheme was launched with the aim of providing cheaper loans and mortgages to individuals and businesses. Six months on, there's no doubt that mortgage rates have fallen as planned, but the side effects of this initiative have been nothing short of disastrous for UK savers.
Barely a day goes by without the launch of another record low mortgage deal, only last week we saw HSBC offering a two-year fixed rate at 1.98 per cent and Tesco Bank just 2.89 per cent fixed for five years.
But while homeowners are eagerly filling their boots and remortgaging to ultra-cheap home loans, savers have watched in vain as a huge chunk of their interest income has been wiped out.
We are continually being reminded of the need to put money aside for our retirement but if the incentive to save for the short term is eroded, it's going to have a knock on effect on long-term savings too.
So far the government has seemingly turned a blind eye to the plight of savers who have seen returns fall by up to 35 per cent in the past half year.
It makes you wonder if this is what ministers wanted to happen, hoping some people would become so frustrated with the meagre returns on offer that they'd give up on saving and start spending – thus giving the economy a much needed shot in the arm.
For those who rely on savings interest to boost their pension income it's a massive problem as they are facing higher energy, food and fuel costs on a much reduced income. For some savers this will leave no alternative but to use some of their capital just to make ends meet, but this strategy will only work until their nest egg is exhausted – and then what?
Last August you could have earned 3.19 per cent on an instant-access savings account; the best is now just 2 per cent. Similarly with fixed-rate savings bonds: six months ago you would have got 3.5 per cent for 1 year and 4.5 per cent for 5 years; those rates have since slumped to just 2.25 per cent and 3.1 per cent, respectively.
Even those looking to shelter their cash in tax-free savings aren't immune to the savings meltdown. It's no longer possible to get an ISA paying more than 3 per cent, whereas last August it was possible to achieve 4.15 per cent.
When you do the sums and work out what this means in real cash terms for savers, it's easy to understand how some people are struggling to keep pace with the increasing cost of living.
Last August a couple with a nest egg of £50,000 in a one-year fixed rate bond could have earned £146 a month before tax, but now the very best deal available will bring in only £93 a month, or £636 less over a year.
With experts predicting that inflation is likely to increase rather than fall back towards the 2 per cent target figure, many people can expect further hardship.
The Funding for Lending scheme is due to run for 18 months, but if the first six months of this experiment are a sign of what's to come, it's time to consider a plan B – and quick.
Free mobile broadband initiative proves popular
The mobile broadband market is dominated by a few major players; however increased competition and advances in technology have seen costs for those operators fall sharply over the past few years.
Last year a new entrant, Samba, launched a service offering free on-the-go 3G broadband for laptops, netbooks and tablets.
Of course you're not going to get something for nothing, but I'm sure the trade-off will go down well with cost-conscious mobile web users.
The way the deal works is that you pay a one-off £5 fee for a SIM, or £25 for a wireless dongle and SIM. After that there is nothing further to pay: you simply earn additional credit by watching high-quality video advertisements.
Watching the equivalent of just two and a half minutes of adverts a day earns you almost 520Mb of data transfer per month, which could save you £8 to £10 a month compared with a conventional mobile broadband contract. With more than 3.5 million adverts viewed to date, there seems to be a growing market for the service.
This cost saving service won't appeal to everybody, but with an estimated seven million adults using broadband on the go, customer numbers will continue to grow.Reuse content