SMEs Suffer Lost Interest as Banks Slash Interest Rates
Analysis by Investec Private Bank reveals that for high street bank business deposit accounts with published rates, the average return fell from 2.94% gross annual equivalent rate (AER) in October 2008, to just 0.21% gross AER by February 2010. Small businesses currently have around £54.5bn in high street bank deposit accounts, and this fall in interest rates could cost them as much as £1.49bn in lost gross annual returns.
Jack Jones of Investec said: “The Bank of England base rate has fallen by 4% since October 2008, and this has resulted in many banks and building societies slashing their rates of interest on their deposit accounts. Our research shows that, as at February 2010, 79%% of business deposit accounts from high street banks are currently paying less than 0.2% interest, which makes it all the more important for businesses to ensure that they are receiving a fair rate of interest on their money. If they are not, they should be prepared to switch to a more competitive account.”