MSE News: Savings rates dive, so what next for your cash?

Former_MSE_Guy

"Savings rates have plummeted over the past few months, with the expectation they could slump further ..."

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Savings rates dive, so what next for your cash?

Pincher

Who wants to save?

I should set up a bank, so I can borrow at 1% from the government, and lend to poor people at 5% or more.

It's like the bodysnatchers have infiltrated the government, as well as the banking industry. The entire system seems to a conveyor belt delivering money into the banker's pocket.

oldvicar

Well fixed rates for 1, 2, and 3 years have stayed the same or actually risen, on taxable accounts.

Unsurprisingly the rates of 4 and 5 year terms have eased as people realise that BoE won't be raising base rates for ages - in June there was still thought to be a chance.

But the real story is that, as usual ISA rates have tumbled now that the ISA silly season has ended, and that the DISGRACE is that ISA rates are lower than standard rates. The banks are more or less helping themselves to the tax advantages. It is because ISA money is 'stickier' that the banks don't have to compete so hard for it, even though this also means they could afford to pay the same, or a premium, on ISAs if they wanted to.

It would be great if MSE (Saint Martin himself) could campaign for fairer treatment on ISA accounts - a code of conduct for banks that says they will offer (at least) the same rate as on equivalent taxable accounts, and if they won't do it voluntarily then a campaign for the new regulator to force them.

2010

Maybe we should be asking the head MSE where`s he`s stashing his £87 million.

It can`t all go into an ISA.

grey_gym_sock

£85k in each of 1024 different banks / building societies

mulronie

oldvicar wrote: »

But the real story is that, as usual ISA rates have tumbled now that the ISA silly season has ended, and that the DISGRACE is that ISA rates are lower than standard rates.

I think it's easy to see why ISA rates often trail the "best buy" available from that same institution, often negating the tax benefit.

ISA administration must be an absolute nightmare - think of all the fannying around that must go on reporting deposits and account openings to HMRC by NI number, dealing with "voids" and over-subscriptions, handling tax-related customer queries/transfers in/transfers out, etc etc. Compared with a straightforward savings account, it must have 10x more admin. Of course, all of this comes at a cost, and that cost gets passed on to us in the form of reduced rates.

Not to mention the fact they can only raise maximum £5640 from each customer a year - unfortunately, chicken feed as far as a bank is concerned. When someone comes out with a "best buy" eSaver, they will get tens of thousands of new accounts, opened and funded easily and quickly, many with £85k from the wealthy among us, so there's really very little reason for them to offer a consistently good ISA rate - other than around the new tax year when they can pick up new customers and get away with cutting their rate to 0.1% after a year.

Ifts

oldvicar wrote: »

It would be great if MSE (Saint Martin himself) could campaign for fairer treatment on ISA accounts

Saw this article over on TIM website about this:

Banks' low Isa rates 'steal' up to £375 a year from long-suffering savers

Read more: http://www.thisismoney.co.uk/money/saving/article-2029345/Banks-low-Isa-rates-steal-375-year-long-suffering-savers.html#ixzz247EVSdl0

Looks like the banks are blaming it on increased administration costs with an Isa and also the lower balance of Isa accounts -

Halifax claims extra administration is involved in Isas and it has to check savers do not take out more than one Isa or put too much in. It also says transfers to and from other providers also take more time than just opening an account.
Halifax also argues the average balance in a fixed-rate Isa is £9,000 against £25,000 in a fixed-rate bond. It needs to open more Isa accounts to attract the same level of cash, adding to the overheads.

Read more: http://www.thisismoney.co.uk/money/article-1244522/STOP-Greedy-banks-steal-Isa-tax-breaks.html#ixzz247HbIVVp

Credit-Crunched

Should we also enforce that power companies can not charge more than 5% above the price of crude oil and natural gas?

Should we also state that Tesco can not make more than 10% profit margin on any of their goods?

Should we also state that a garage can not charge more than £10 per hour for work undertaken?

Wake up people, banks are a business, people have no inherent right to have a certain return on their money? Banks make money, simple, they buy something cheap and sell it expensive, the same macro and micro economics that every other industry thrives on?

People want some ways to get the most of their money in this era of low interest rates, well there is one, PAY OFF YOUR MORTGAGE THAT IS ON 1% ABOVE BASE.

Will people do that, no? Much easier to bleat on about how hard done by everyone is?

yawwwwwwwwnnnnnnnnnnn

grey_gym_sock

so you're saying that businesses are essentially out to screw us in every way possible, and therefore we shouldn't complain.

well, that doesn't follow at all.

if you'd said: we need to look out sharp to protect our interests, i'd agree.

if you'd said: it's not easy to change how banks operate, i'd agree again. but it's not impossible for anything to ever change.

innovate

Credit-Crunched wrote: »

PAY OFF YOUR MORTGAGE THAT IS ON 1% ABOVE BASE.

Fast forward if you can, Credit-Crunched. Any suggestions what people should do once they paid off their mortgage?

Credit-Crunched

innovate wrote: »

Fast forward if you can, Credit-Crunched. Any suggestions what people should do once they paid off their mortgage?

Sit in your unencumbered property, enjoy it, crack open the holiday brochure and start to spend your hard earned cash!!