Millions of savers have no choice but to lose money

There are only 31 accounts in Britain that offer savers a real rate of interest that is positive, a leading personal finance analyst warned yesterday, while higher-rate taxpayers have a choice of just two products.

Moneyfacts' analysis shows that the persistently high rate of inflation is making it ever harder for savers to make a return on their money, once the effects of inflation and tax are taken into account. A higher-rate taxpayer now needs an account paying 5.33 per cent a year in order to be in the black, it said.

Just two products, from the Barnsley and Yorkshire building societies, beat that rate, and then only by asking savers to tie up their money in bonds with some exposure to the stock market, thus requiring them to risk a loss of their starting capital. For basic-rate taxpayers, the break-even savings rate is now 4 per cent.

While there are 31 accounts meeting that threshold, 30 of them require savers to tie up their money for between three and five years.

Moneyfacts' warning underlines how badly those depending on their savings accounts for income on which to live, including thousands of pensioners, are suffering as the Bank of England continues to maintain the base rate at a record low of 0.5 per cent.

While mortgage borrowers haveenjoyed big savings from the cut-price cost of borrowing – which has been maintained at 0.5 per cent since March 2009 – savers have become increasingly angry about the damage being done to their finances, particularly as inflation has risen again this year.

"The stealth enemy called inflation is quietly but aggressively eroding the spending power of a saver's hard-earned nest-egg money," said Darren Cook, a spokesman for Moneyfacts. "It is difficult for savers: at best they should try to stay within an arm's length of inflation and try to weather the storm of low rates and high inflation," he added.