How it doesn’t pay to be either a lender or borrower in the UK of 2009.

In times gone by, the self righteous members of the community were often heard to say "neither a lender nor a borrower be." Not a bad piece of advice it would transpire and one that should have been heeded more carefully a few years ago. However it must have been hard to take when handed out by your maiden Aunt who refused to lend you sixpence for your bus fare, which you had mistakenly spent on liquorice allsorts.

The last year has seen an all time low for both savers as well as those whose life style forces them to borrow just to survive. For savers it has been especially tough. According to statistics gathered by the Bank of England’s the average interest rate for savers has plunged from 4.49% to 0.41% in the last twelve months, as the BOE has cut interest rates to the bone to prop up the banks.

Interest rates for the average instant access account has plunged from 1.85% before tax (2.31% after tax) to 0.14% (0.17%), while the average price of fixed rate bonds has fallen from 4.53% (5.66%) to 2.42% (3.03%).

However the true picture for many savers is a lot less colourful than that, as these rates are only on offer frosh fresh deposits, while much of the money held in UK banks are on older long terms plans, where interest rates have plunged as low as 0.08% (0.1 %) interest, returning just 80 pence interest a year for every £1,000 saved.

For borrowers the picture is just as gloomy. Overdrafts are being cut and default interest rates being applied with a heavy hand. Those whose debt package is linked to their credit card have fared no better. Reports of rates hiking reduced borrowing limits or even having their credit cut off completely abound. And balance transfer deals and reward schemes are rapidly becoming part of banking history.

It may be a bitter pill for many to swallow, but Auntie might have been right!

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Tags: Bank of England, Banking, BOE, British Economy, British Pound, Credit, Credit Crunch, Current Account, Debt, Economy, Financial News, Interest Rates, Money, Money Management, Overdraft, Recession, UK Banks, UK Economy, UK Recession