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First the good news. The savings rate is rising, reaching levels not seen more than a decade ago. However, let’s not get too carried away. Once raging inflation is factored in, savers have rarely had it so bad.
Last week, in response to inflation hitting a 41-year high of 11.1 percent, I asked Rachel Springall, a financial expert at data scrutineer Moneyfacts, to do some math. Going back to the last time the Bank of England base rate was 3% (November 2008), I asked her to track and chart four key rates.
The rates were base rate, the average standard variable rate mortgage (SVR), inflation (as measured by the Consumer Price Index), and the average interest rate on an easily accessible savings account.
The results are presented in the graph opposite and tell their own story. Not only are savers’ deposits ravaged by inflation, undermining their real value, but savings rates are also being deliberately suppressed by banks seeking to maximize profits. The fewer banks pass on the interest to savers when the base interest rate rises, the more profit they make.
So, in December 2008, Springall says the average easily accessible savings rate was 2.58 percent and the average SVR mortgage rate was 5.68 percent. Inflation was 4.5 percent.
Today, the respective numbers are 1.25 percent (outrageous), 6.49 percent (outrageous, even though most home loans are now firm), and 11.1 percent. To use blunt financial language, savers are currently being screwed by the banks as they see the real value of their savings being devastated by inflation.
If you need more evidence on this, I recommend reading our review of investment fund JOHCM UK Equity Income. The managers of this fund have built up large positions in the banks – especially Barclays and NatWest. This is because they believe the companies will generate higher profits if interest rates remain high, allowing them (the banks) to make money from the difference in interest they charge borrowers and give to depositors.
For the record, NatWest currently pays 0.5 per cent on Internet Saver, while Barclays pays 0.25 per cent on balances up to £49,999 in Everyday Saver. An everyday savings scandal.
You could argue that rather than being a bank saver, you’re better off buying their shares, as JOHCM UK Equity Income have done, and get a mix of capital and income returns.
Risky, yes. But as they say: fortune favors the brave.
Dig deep for running hero Kevin
I’ve done crazy things in my past to raise money for charities: most notably running ten marathons in ten days (262 miles) for charity Brathay in 2012.
But this mammoth task, which involved a total of 46 hours of running around Windermere in the Lake District, dwarfs what rugby league legend Kevin Sinfield has just done.
Yesterday he rocked out at Manchester’s Old Trafford – at half time of the men’s Rugby League World Cup final – after running more than 300 miles in seven days. He did it to raise money for a number of charities involved in supporting people with motor neuron disease (former Top Gear presenter Sue Baker passed away last week).
If you feel like donating, please visit the website: https://donate. giveasyoulive.com/fundraising/kevin-sinfield-ultra-7-in-7-challenge. Don’t forget to add a gift card. I sponsored Sinfield last week and will be competing in the Rob Burrow Leeds Marathon in May next year (Rob is a former Sinfield teammate who is currently in the throes of the raging MND).
I’m a wimp compared to the mighty Sinfield, but I’m determined to do my part for those involved in beating ALS and caring for people living with the disease.
Amazon, wrong pants and a VERY gross toy
Surprise: a wizard kit instead of an iPad
A huge thank you to the readers who have reached out to me over the past few days to tell me their stories of Amazon woes.
This followed my article a week ago about Mike Oliver from Hampshire ordering two iPad Pros from the US tech giant and instead receiving a roll of chicken wire and some Felix cat food. It was only after The Mail on Sunday got involved that Mike got the payback he had long been fighting for.
Paul Eden-Smith from Nottingham had a similar experience to Mike.
He ordered an iPad Pro and a keyboard from Amazon. While the keyboard arrived in a separate package, the other box contained two random children’s toys: a wizard in tracksuit and a Frisbee. He’s spent the past few weeks communicating with Amazon infobots and via email — a process, he says, “worse than crawling over thumbtacks and razor blades.”
Only in recent days has Amazon finally accepted responsibility for the mis-shipment and agreed to refund him for the iPad Pro he never received.
“Dealing with Amazon was difficult,” says the 63-year-old. ‘You can’t talk to a human being, while online conversations often end without rhyme or reason.’
Earlier this month, another reader ordered a pair of Mammut hiking trousers (UK size 8) from Amazon but was sent a size 12 (US size 8). She sent them back and reordered, but got a size 42 again.
She went back to the post office, reordered for the third time – and yes, you guessed it, another size 42 arrived. She was refunded £145 and told to keep (throw away) the trousers.
Another reader ordered an Apple iPhone and received a six pack of Nivea deodorants – she’s still fighting for a refund because they want her to return the phone she never received.
But nothing beats the unexpected birthday present a 76-year-old woman received from her husband. Let’s put it this way, it wasn’t the Dyson hair dryer he ordered, but the sort of raunchy sex toy that Gwyneth Paltrow likes to promote.
On Friday, the man said he had been refunded the full amount. As for the toys, they are currently “in the back of a wardrobe because we don’t know what to do with them.”
There are more Amazon accidents I could report, but you get the gist.
I just trust that the five-digit job cuts the company plans to go through won’t affect its already cracking customer service.
A whole week on the trains
It’s been on the trains for a whole week. No strikes, but plenty of delays – some fog to deal with (Monday) and rain to negotiate (most of the week).
Drowned rats came to mind on Tuesday as I patiently waited for the 6.27am train to arrive at Wokingham – drenched by a Berkshire monsoon.
At least I didn’t have rain leaking through the roof of the train, as a commuter experienced, much to her horror, on her way from Chichester to London.
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