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Savers 'feel impact of low interest rates'

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New data has indicated that national rates of interest being maintained at record lows for four years is really starting to make its impact felt for savers.

The base rate is currently at 0.5 per cent - which is lower than it has ever been at any other point in history.

Figures compiled by the Wesleyan Assurance Society revealed that savers have lost out on potentially hundreds of pounds in returns that have been denied to them.

For instance, a saver with £5,000 could have lost out on a total of £418.31 in gross interest over the past four years.

This could discourage investors from making an overseas money transfer, as economic conditions may be more favourable in other countries.

Wesleyan analysed the difference between keeping money in an account that pays out interest at the current base rate with one that paid out 2.5 per cent.

The potential loss of gross interest for an individual with £100,000 of savings before interest rates fell could be more than £8,000.

Sales and marketing director at Wesleyan Samantha Porter acknowledged that while people may have a great deal of concerns in an economic climate as difficult as this one, making sure savings are working as hard as they can may not be at the very top of everyone's to-do list.

However, she added that failing to shop around for the best deal can have a very negative impact on a person's finances.

"In reality, with inflation still above the target rate of two per cent, savers need to work even harder just to stop the real value of their money from being eroded," the expert commented, adding: "One way to lessen the effect is to make use of individual Isa allowances, shielding some or all of their savings from income tax and thus preventing it from being eroded further still."

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