Savings Account Interest Rate, Like Key Benchmark Rate, At An All-Time Low In U.K.

London, England (AHN) - With savings deposit interest rate falling to an average of less than 1 percent caused by the recent benchmark rate cuts, savings rate across the United Kingdom fell to an all-time low also.

Affected were notice accounts, tax-free Individual Savings Accounts and bonds due to the record-low lending rate. Average rate of return on instant access accounts was 0.81 percent. One-year fixed-rate bonds from ICICI went down to 4.64 percent from 5.1 percent. It followed the reduction by the Anglo Irish Bank last week of its one-year fixed-rate bond to 4.6 percent from 5 percent.

Because of the 3.5 percent base rate cut by the Bank of England since October to a record-low of 1.5 percent, 40 percent of savings account now bear returns of 1 percent or less for deposits of $7,449 (5,000 pound), while 7.5 percent pay a 0.1 percent interest rate.

This development affects the hardest Briton pensioners who depend on interest income generated by their savings. National Pensioners Convention general secretary Joe Harris estimated an average pensioner with $14,899 (10,000 pound) in the bank or a building society will suffer from a $8.94 (6 pound) reduction in interest income every week.