When spending rather than saving seems the more sensible option, then something is out of joint

Savings are not what they used to be. Photo: Peter Byrne/PA Wire

Savings are not what they used to be. Photo: Peter Byrne/PA Wire - Credit: PA

Here we go again – the end of the financial year coming up and it's time to play musical chairs with the savings.

A deeply dispiriting exercise.

Yes, I know I'm lucky that at last we've got a few bob tucked away. It's because most of our lives we lurched from payday to payday with fingers crossed, that I made the effort to save when I could.

I tried to be grown up and do the sensible thing. Ha! Much good has it done me. That's why I'll be spending the next week or so agonising over Best Buy tables to see where I can get a measly extra quarter per cent on our dosh.

Two things particularly depress me: First, when we had no savings but were paying a mortgage, rates were generally around 10pc, sometimes a lot higher. Now we have a few savings, you're lucky to get much more than 1pc. That doesn't seem very fair...

Secondly, everyone says that last month's mortgage was a bonus for savers. Really? Have they actually checked the figures?

True you can now put an extra £5,000 a year in a tax free ISA. And how much will that bring in? – About £60 a year. Whoop di doo! Not exactly life-changing.

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Basic rate tax payers can now earn £1,000 interest tax free. Excellent and long overdue. I have a tax certificate for one account that says 'Interest paid 19p. Income tax deducted 4p' which was the ultimate kick in the teeth really.

But to get that £1,000 you'll need about £100,000 in savings. Our parents would have needed less than £20,000.

It's not the allowance that's the problem, it's the rubbish interest rates of course. The longest and lowest in history. Great for those who already have a mortgage. Not much good for those struggling to save for one.

I thought low interest rates were a response to desperate economic times. But the chancellor tells us we're doing well.

So why in the past month has nearly every savings provider written to tell me that rates are 'changing' – which you know means going down. Even Premium Bonds, which at least give us some small, vague hope of the odd £25 to cheer our miserable lives are going to be even meaner in future.

In the short term it's no reward for those of us who've struggled to do the sensible thing. In the long term, it's doing nothing to encourage people to save. Why should they? Money in the bank will soon be losing value rather than gaining. So why not spend it and have something to show? It's tempting to blow the lot and let the State – ie everyone else – keep us when we're broke again.

I won't, of course. But when spending rather than saving seems the more sensible option, then something is definitely out of joint.

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