Why give banks your money?

Paul_Herring

ameade wrote: »

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).

Nice attempt at rhetoric, but inflation isn't theft, and you're not going to lose 100% of your cash in one incident of inflation.

stator

I don't think the banks have any obligation to offer interest rates at any particular level. They are providing a service, for free in most cases, and there are so many banks out there that they do compete to provide that service. If interest rates are low on savings it's because that's all they can offer at the moment, you can't force them to offer savings rates that would make them lose money.

jamesd

How long do you plan to keep the money without spending it on something? If it's for years then corporate bond funds (5-6%) and equity income funds (4% or so) within an ISA can be expected to pay more than savings accounts with reasonable prospect of capital value increase. 8-10% also available with more chance of capital value decrease. The equity income funds values vary more but they have a better chance of delivering both the income and growing the capital enough on average over the log term to also cover inflation. Any of these can be expected to pay more than typical Zopa rates after tax and expected bad debt is included in the picture.

Reaper

There's no point in getting angry with the interest rates the banks are offering. Part of the reason Base Rates are low (and hence retail bank rates) is to discourage saving.

Instead of digging a hole in garden for your money you would do a lot better to play the game and either spend or better still invest (assuming long term of course) rather than save.

Kohoutek

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.

There are plenty of individuals/companies/governments out there willing to pay you more for your money, it's just you need to be prepared to take higher risks.

chewmylegoff

ameade wrote: »

Anyone got any suggestions of forming an alternative system? Perhaps a secure storage system for cash after its withdrawal from banks?
All suggestions welcome.

what a great idea.

we'll have to pay for the storage facility though, everything has its cost. what we could do is loan out some of the money that we don't immediately need and charge borrowers interest. we'll use the revenue to pay our running costs, and obviously we'll keep a cut for ourselves as we need to be rewarded for the time we spent running the storage facility. we can distribute anything left over to the savers, pro-rata according to the amount they have stored in the facility.

now all we need is a name for our storage facility. any suggestions?

cepheus

ameade wrote: »

Ok, so here we are: Already used the £15k NS&I index linked allowance, good!, QUOTE]

Can't you invest another 15k in the other issue (3yr +5yr) or have you already done that?

Norman_Castle

Just a thought.If I save with national savings.Index linked,Guaranteed income,Premium bonds etc.Am I helping the government and the UK by loaning my money to it, at a lower rate than is avaliable elsewhere.

dzug1

chewmylegoff wrote: »

what a great idea.

we'll have to pay for the storage facility though, everything has its cost. what we could do is loan out some of the money that we don't immediately need and charge borrowers interest. we'll use the revenue to pay our running costs, and obviously we'll keep a cut for ourselves as we need to be rewarded for the time we spent running the storage facility. we can distribute anything left over to the savers, pro-rata according to the amount they have stored in the facility.

now all we need is a name for our storage facility. any suggestions?

Might I suggest a BANK?:D

dunstonh

There are plenty of individuals/companies/governments out there willing to pay you more for your money, it's just you need to be prepared to take higher risks.

It doesn't have to be "higher" is a lot higher. Just slightly up the scale.

There is no risk free option a lot of the time. Especially if you are using the interest to live on. You may shy away from investment risk but you replace it with shortfall risk and inflation risk. Shortfall risk on savings accounts could be someone that needs 5% to live on and 2.5% to cover inflation (so total 7.5%). However, they are only getting 3% so they are creating a capital loss. In those cases moving into investments can be more sensible without actually creating much more risk as you are losing capital anyway so why not invest it in something yielding around 7%.