Why give banks your money?

ameade

If banks continue to give paltry interest rates to savers and charge relatively much higher rates to borrowers, why not withdraw your savings in cash and bury them somewhere just to spite them. You're only going to lose a paltry amount of interest anyway. Would it not soon force their hand to offer decent rates? We savers have been taken as fools for too long.
Anyone got any suggestions of forming an alternative system? Perhaps a secure storage system for cash after its withdrawal from banks?
All suggestions welcome.

opinions4u

ameade wrote: »

If banks continue to give paltry interest rates to savers and charge relatively much higher rates to borrowers, why not withdraw your savings in cash and bury them somewhere just to spite them. You're only going to lose a paltry amount of interest anyway. Would it not soon force their hand to offer decent rates? We savers have been taken as fools for too long.
Anyone got any suggestions of forming an alternative system? Perhaps a secure storage system for cash after its withdrawal from banks?
All suggestions welcome.

1) Some interest is better than no interest.

2) I think my cash is safer in the banking system, backed by stable government, than locked in a box in my bedroom.

3) If everybody withdrew their cash, all the banks would crash and the financial system would collapse devastating the economy and making us all worse off.

4) The margins between saving and borrowing rates, allowing for bad debt, are actually much the same as they were pre-recession.


Apart from that, great idea!

amcluesent

>Anyone got any suggestions of forming an alternative system?<

Zopa?

ffacoffipawb

ameade wrote: »

If banks continue to give paltry interest rates to savers and charge relatively much higher rates to borrowers, why not withdraw your savings in cash and bury them somewhere just to spite them. You're only going to lose a paltry amount of interest anyway. Would it not soon force their hand to offer decent rates? We savers have been taken as fools for too long.
Anyone got any suggestions of forming an alternative system? Perhaps a secure storage system for cash after its withdrawal from banks?
All suggestions welcome.

NS&I index linked certificates?

That's where my maturing fixed rate bonds are going.

All variable savings held in 3 Lloyds Vantage accounts!!

rl290

NS&I index linked bonds look v. attractive to me in the long term. If there is inflation in the future, then you'll be laughing (it's already paying c.6% tax free!). If there is deflation, then the bond pays you 1% - again, not too shabby if prices are falling a few percent.

Zopa is a more risky alternative, and ties up money for longer.

Gold, as always, remains the ultimate source of wealth and answer to all of mankind's problems. It will make all your wildest dreams come true. Vote for Pedro.

R

dunstonh

If banks continue to give paltry interest rates to savers and charge relatively much higher rates to borrowers, why not withdraw your savings in cash and bury them somewhere just to spite them.

I'm with Lloyds. Mortgage is 2.5%. The net interest margin is around 1.3% historically (sometimes lower, sometimes higher depending on rates). So, that should see savings rates around 1.2%.

We savers have been taken as fools for too long.

Many savers are fools by relying 100% on cash to meet their needs. Saving rates, whether they are 1%, 5% or 10% rarely beat inflation by much. Its only when rates are this low that many are starting to realise their mistakes. The sensible ones investigate options and make changes. The less sensible ones bury their heads in the sand or whine about it.

atypical

opinions4u wrote: »

4) The margins between saving and borrowing rates, allowing for bad debt, are actually much the same as they were pre-recession.

Not that I don't believe you but more for my own sake, do you have an article or something supporting that? What are typical margins?

Paul_Herring

ameade wrote: »

why not withdraw your savings in cash and bury them somewhere just to spite them.

And if it gets stolen? You cannot insure sums of money on your house insurance (well you can, but it only covers you for a small amount; ~£500 IIRC.)

ameade

Ok, so here we are: Already used the £15k NS&I index linked allowance, good!, also getting rubbish rates on ISA bad! What to do with rest of cash?
Zopa sounds to be a partial solution.
Back to my point that why should I leave anything in a bank that's robbing me. If I withdraw and lodge it safely somewhere and everyone else does the same the banks will have to offer some incentive to keep it with them. On the point that it wouldn't be safe and could be stolen, it's being stolen anyway by inflation (quantitative easing I think they call it).

dunstonh

Not that I don't believe you but more for my own sake, do you have an article or something supporting that? What are typical margins?

Typically its around 1.3% (as mentioned in post #4). However, I read last year that the net interest margin was down below 1% for many banks.

They are losing out as well as the moment as the lower the rate, the less they have to play with.

Old_Slaphead

dunstonh wrote: »

They are losing out as well as the moment as the lower the rate, the less they have to play with.

Maybe some cost cutting would't go amiss (which is precisley what my company has to do when margins are under pressure)