Should there be a legal minimum interest rate for fixed rate accounts, for NS&I at least?

cricidmuslibale

Newbie here! Is it just me that thinks this or does anyone else agree that it really isn't morally right at all for financial institutions, especially a state savings provider like NS&I, to be offering very low interest rates (less than 0.5% AER) on fixed rate accounts? Surely if you're asking people to tie their money up with you for a year or more, often with no withdrawals permitted, there should as a fair return for this be a legal minimum interest rate paid on these savings, say at least 0.5% AER! All opinions welcome, of course.

AlanP_2

No, interest rates are a function of what is happening in the national / global economy, and for NS&I at least, the UK Govt's demand for UK savers cash.

Current conditions, with low global inflation etc. etc. mean there is little demand for UK savers cash as the Gov can borrow at very good rates on the open market.

Why should NS&I offer a premium rate that has to be paid for by UK taxpayers? 

EdGasketTheSecond

Thrift and saving should be rewarded. Instead borrowing to buy what you can't afford and haven't yet worked for is being rewarded. This includes the government who want inflation to help resolve their debt problem. Then you have the World Economic Forum that doesn't want anyone to own anything (except them of course) by 2030.

I agree with you except the rate should be a minimum of the inflation rate not simply 0.5%. In the real world it isn't going to happen so buy gold and hope for the best. Good luck.

Sailtheworld

EdGasketTheSecond said:

Thrift and saving should be rewarded. 

Thrift and saving is it's own reward. Not sure why I, as a taxpayer, need to pay for a cherry on top.

ranciduk

The government doesn’t want anybody saving money right now

they want us all to spend spend spend!

im beginning to think I’ll never see half decent interest rates again in my life time...

cricidmuslibale

Thanks for all responses so far, much appreciated! I very much hope that one day please, not too far in the future, there will be some reasonable interest rates again, especially for those who rely partly on savings income to get by!

ranciduk

Just weeks before coronavirus hell arrived, and 12 years after the world wide financial crash, Halifax were offering a fixed Isa at 0.55%

Says it all really

IvanOpinion

cricidmuslibale said:

Newbie here! Is it just me that thinks this or does anyone else agree that it really isn't morally right at all for financial institutions, especially a state savings provider like NS&I, to be offering very low interest rates (less than 0.5% AER) on fixed rate accounts? Surely if you're asking people to tie their money up with you for a year or more, often with no withdrawals permitted, there should as a fair return for this be a legal minimum interest rate paid on these savings, say at least 0.5% AER! All opinions welcome, of course.

Just remember that it is your government that has to pay this money back through revenue generation and taxation. Now who do you think is paying that?  So it would be a case of giving you more interest and then raising your taxes to pay it back.  There is usually only one loser in that (spoiler alert, it won't be the government).

cricidmuslibale

Sailtheworld said:

EdGasketTheSecond said:

Thrift and saving should be rewarded. 

Thrift and saving is it's own reward. Not sure why I, as a taxpayer, need to pay for a cherry on top.

Thrift and saving without a half-decent interest rate is actually penalised, not rewarded, as I'm sure you all know that inflation eats into your capital so that it is worth less and less over time! That's mainly why I believe that interest rates that are very often lower than inflation for fixed rate accounts are if nothing else very unfair!

ColdIron

Is it 'fairer' to expect people on average (or lower) income to subsidise others wealthy enough to be able to lock away their excess cash? The people with cash suffer erosion by inflation but those who would be paying for the subsidy would suffer through higher taxes or reduced public services

Thrugelmir

EdGasketTheSecond said:

Thrift and saving should be rewarded.

Reward should come from taking a risk.