A Prepaid Card for Inflation-hit Savers
Inflation continues to punish savers extensively, new research shows. Find out how a prepaid card can help you manage your money.
Latest inflation figures reveal the consumer price index remains at 3.10 percent. For a saver to maintain purchasing power of their savings, a basic rate tax payer needs to have a savings account paying 3.88 percent pa as the average interest rate payable for a basic rate tax payer is being eroded by 2.47 percent a year in inflation.
A higher rate tax payer on the other hand at 40 percent needs to hold an account paying a huge 5.17 percent.
If you are dependent on savings as an extra boost to your income or pension a good way to budget is to take out a prepaid card where you can closely monitor your spending.
The research showed that many of the accounts that negate inflation are ISAs which make up 53 per cent in total. There are more cash ISAs available for those seeking a good savings account, however a longer term fixed rate bond has also been found to negate inflation effects but requires long term commitment.
“Inflation continues to antagonise prudent savers who are already struggling to achieve a competitive return on their money,” said Michelle Slade, Moneyfacts.co.uk spokesperson.
“In recent weeks savings rates have started to rise, but nowhere near enough to combat the effects of inflation.
Those who rely on their savings to supplement their income have been hardest hit by continued inflationary pressure, many of whom are pensioners.
A Prepaid Card for Budgeting
If you are a pensioner and are reliant on savings to boost your pension, a prepaid card could be a good option to help you budget your monthly outgoings.
The benefits of a prepaid card are that no credit history is required as the card holder transfers their money onto the card and they are not borrowing. By putting a certain amount on the card each month a card holder knows they will not have bills to pay at the end of it and borrow over what they cannot afford.