It was another quiet weekend for savings stories – although, unsurprisingly, there were a couple of articles that looked at saving up for your wedding! I wonder why.
In The Times, our very own Tom Adams suggested that the first port of call would be a regular saver account, as these offer some of the best rates available - as he points out, you can earn up to 5% gross/AER, although to earn this rate you’d also need to have or open an accompanying current account.
The Times also wrote a ‘Savings Watch’ about bonus rate accounts – pointing out the pros and cons. Basically, whilst less prolific in the best buy tables these days, bonus accounts can offer some of the best rates around, like the Bank of Cyprus Online Easy Access account* that is paying a market-leading 1.32% (this rate includes a 12-month bonus of 0.47%). However, you need to remember to move your money when the rate drops – of course the providers are hoping that inertia will get the better of you and you’ll leave your money languishing long after the bonus has ended.
The Sunday Times had an interesting cautionary article about Peer to Peer lending (P2P). As well as explaining how P2P works, it included a couple of examples of where things have not gone entirely to plan. One of the examples they use is Collateral UK, a small P2P lender in Manchester which promised returns of up to 12%. Warning bells should start ringing right there! Collateral UK went into administration in February, with £21m of investors’ money on loan. Their customers won’t necessarily lose all of this money, but the problem is that they just don’t know at the moment how much will be returned to them.
Of course, there are also many savers who have had good experiences with P2P, but it’s important to do your homework and understand the risks involved before investing. And remember that, whilst now regulated, your return is not guaranteed and your money is not protected by the Financial Services Compensation Scheme (FSCS). To put it simply, P2P lending is an investment and NOT the same as depositing money into a bank or building society savings account.
Once again there were a few articles debating whether the Bank of England is ever going to raise interest rates. An article in The Sunday Express pointed out that UK households were in debt to the tune of a mind-boggling £1.58 trillion in April, up 3.5% in the last 12 months. With interest rates so low, rather than cutting back and paying off debt, we are borrowing ever more.
In the meantime, the growth of the UK Economy is continuing to slow.
In that article, Chief Executive of The Money Charity, Michelle Highman, warns “If this lack of GDP growth continues, more and more people will struggle. She said that people are failing to give themselves a safety net, and nearly 10 million have no savings. She blames low interest rates “They continue to encourage high debt levels and low savings priorities”.
*We are occasionally paid by some providers if you click through from our Best Buy Tables and open a savings or current account with them. We will never accept a payment that compromises in any way our independent, whole of market approach to providing information on savings products. For clarity we will indicate those companies who remunerate us with an asterisk (*).
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