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13/01/11
One in four consumers will stop saving in 2011

A survey by moneysupermarket.com, suggests that one in four consumers will stop saving in 2011, and a further one in 10 who would like to save think it may not happen.

But 30% of respondents who already put money away plan to save more this year.

Kevin Mountford, head of banking at moneysupermarket.com, said: "It is good to see some people will continue to save, and those that can still afford to put money away need to make sure they are getting the best deal for their circumstances. In the current low rate environment many may think it is easier to stick with their existing savings provider – however it is more important than ever to consider switching to the best paying account in order to make their money work harder.

Base Rate Held

The Bank of England base rate was left unchanged last week at 0.5% – making January 2011 the 22nd month in succession it has remained unchanged. This is the longest period of unchanged rates since the aftermath of the Second World War with the rate at it's lowest since the Bank was founded in 1694. During the 22 months the average variable savings rate has been just 0.77%.

With inflation running relatively high, it's possible that saving money can easily mean losing money – because unless you can beat inflation with the interest rate on your account then you’re out of pocket.

With inflation as measured by the consumer prices index (CPI) at 3.3%, you need to get at least that on your savings or you’re losing money.

So in the current economic climate it's more important than ever to shop around for the best deals.

Michelle Slade, a savings expert from Moneyfacts, said: 'Prudent savers have lost out on a fortune in interest. They are being paid a paltry amount of interest on their money.

'Savers have suffered being paid some of the lowest rates of interest ever seen. For them, a base rate rise cannot come soon enough.'

Loyal savers who have not moved their nest egg for years are among the worst hit, with rates of less than 0.1%.