There was some savings news last week – but nothing particularly new. There were of course the expected reviews about the new Marcus Online Savings Account – a journalist at The Times even tested how easy it was to open, finding that it only took five minutes – although they didn’t mention a requirement that is annoying a number of people, the need for a mobile phone number in order to open the account. But overall, as expected, it’s a positive review.
The Sunday Times took a look at how cash ISAs have declined in popularity and how the Personal Savings Allowance could have contributed to this.
Another article covered a message that is regularly told – but is an important one to keep getting out there - the cost of loyalty. According to The Times and Citizens Advice, being loyal to our banks, insurers and telecoms companies is costing us £4billion a year – equivalent to £900 per household. So, it’s time to get switching!
Last week was ‘Good Money Week’, which highlights sustainable and ethical options when it comes to your bank, pension, savings and investments. As a result, there were a couple of articles that looked at this issue. The Sunday Telegraph reported on savers who are choosing to put their money to work where it will help others, especially since interest rates on savings accounts are so poor anyway.
The article highlights that many people may not understand that when you put your money in the bank, it will be used and invested elsewhere, not simply sit in your savings account. So, those who’d prefer their money to be used for good may wish to choose a more ethical bank or investment company. It’s often tricky, especially with the main high street providers, to know what your money is used for - but you would expect the ethical providers to be much more forthcoming.
Jeff Prestridge exposed some 80’s memories in his column last week. He was reviewing the KIDs – but as he says, not New Kids on the Block, but the Key Information Documents that all investment companies need to make available to their customers. The problem is that even though we’ve always been warned that past performance is no guide to the future, it would appear that these KIDs indicate just that and, as a result, show an unbelievably positive scenario for moderate and favourable market conditions.
Jeff picks out a ‘Steady Eddie’ of an investment trust where the KID suggests that in moderate conditions you could expect a 14.7pc annual gain – rising to 23.8pc if conditions turn favourable!! As the column surmises, this is a dangerously misleading and a new KID is required pronto to stop unwitting savers investing into something with a risk that they are not fully aware of and an unrealistic expectation.
The Daily Telegraph’s Marc Sidwell looks at the benefits of paying off your mortgage while savings rates are low and, in most cases, lower than inflation – especially as many banks and building societies failed to pass on the 0.25% base rate rise. However, conversely The Times reports that as the property market is slowing, mortgage deals are getting even better.
As Marc points out, paying off your mortgage early means you can save considerable sums in interest that you will avoid paying, but when you put extra money into your mortgage, you cannot access that money again, unlike in a savings account. So, it’s worth reviewing your mortgage to see if it would be better to pay some off or to get a better deal, then put the amount you are saving into a savings account.
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