Savers and pensioners 'hardest hit' by base rate

Friday, March 5 2010

Britons who rely on savings could be hardest hit by the Bank of England's base rate decision.

According to banking specialist at Defaqto David Black, the 0.5 per cent decision, alongside a 3.5 per cent inflation rate and tax means that savers could suffer.

"Once again those hardest hit will be those who rely on savings interest to supplement their day-to-day living which will be the case for many pensioners," he claimed.

However, people may instead decide to pay off debs and use money that would have gone into savings to reduce loans or credit card bills, Mr Black predicted.

For those who are still looking to save, longer term fixed rate bonds could give the highest savings rated.

Regularly moving money around may also offer benefits, such as introductory bonuses.

Mr Black's advice comes after the Bank's Monetary Policy Committee yesterday (March 4th) decided to maintain the 0.5 per cent base rate, which was introduced one year ago.