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

csgohan4

Seems the OP thinks their entitled to high interests rates and wants the tax payer to fund this

if you want to grow your money much more than the interest rates being offered, put it in a fixed rate account, PB or in  a passive investment tracker and leave it

strawb_shortcake

The argument for a mandated minimum interest rate seems to be more focused on what people do in normal times, rather than the actions people may take as a result of the pandemic.
Those with precarious finances and insecure jobs may be more inclined to save regardless of the interest rate as they can see the very real benefit of having an emergency fund.
Those with more secure jobs may choose to spend a bit more but from what I've seen with friends, family and colleagues is that this year's holiday fund has been spent on the home, so it's more a case of them redirecting funds.

The government already offer help to save accounts to encourage the less likely to save, to save and the returns are far greater than anything on the high street. I wasn't the intended target market for this scheme but due to legacy benefits it's one my Husband and I  can take advantage of. 
When my children were born their CTF had a bonus interest rate of around 6% I think this was 2-2.5% above the base rate, i wasn't in a position to save very much at this time so never took advantage of higher interest accounts.

ossian

No.  Next question.  Your reward is knowing that your money is safe.  The market knows that in an era of low and likely diminishing returns after overheads there is little left to support interest. 

The government doesn't want NS&I killing the private banks so NS&I has to be careful with the rates they offer.  The banking sector is essential to the prosperity of our economy.  It funds nascent ventures which provide economic growth.

Yes I'd love NS&I to pay out more but the cuts in interest/prize rates are understandable and farer overall.  
The government wants money put to work as we need the economy to flourish for everyones benefit whether shareholders or not.
Lastly, investing isn't gambling.  Yes there's risk but there's risk stepping out of your front door but you don't stay inside just in case a rooftile hits you on the way out or a car hits you on route to your destination.  

Saving is still a good thing and the reward is that it gives you a buffer for unexpected expenses.  It is intrinsically rewarding.  If your savings reach a level where adding to them no longer provides sufficient benefit then you either switch the excess money to investing or spending.  After all one has to live while one can.

snowqueen555

NottinghamKnight said:

snowqueen555 said:

NottinghamKnight said:

But the government want people to spend their money not save it, to encourage economic recovery. savings ratios have shot up due to Covid, the problem is that those with money are saving and not spending. Rather than save they would prefer investing if not spending as that again would encourage economic growth and development. Savings rates have a limited impact on the amount saved by many people. 

Government seems to want it both ways. They want us to spend now, but have ben complaining for years that people do not save enough.

Not really, governments have been encouraging spending as we have been a service based economy for decades, as evidenced by the balance of payments deficits that accrued.  The difficulty is that the rich will save when they want the poor to save to reduce reliance on benefits, the benefits system hasn't been good in promoting people out of poverty. They have had some success introducing auto enrollment for pensions but that's a long term project and is only really trying to address the wholesale withdrawal of db pension schemes outside the public sector. Government approach hasn't varied dramatically over those decades be they labour or tory. 

It's always been reported that the typical UK household does not have enough emergency savings, we should be saving for retirement, but also saving for other things. So yes, I do believe my point still stands. The rhetoric to me has been that the government wants us to save and spend at the same time.

masonic

snowqueen555 said:

NottinghamKnight said:

snowqueen555 said:

NottinghamKnight said:

But the government want people to spend their money not save it, to encourage economic recovery. savings ratios have shot up due to Covid, the problem is that those with money are saving and not spending. Rather than save they would prefer investing if not spending as that again would encourage economic growth and development. Savings rates have a limited impact on the amount saved by many people. 

Government seems to want it both ways. They want us to spend now, but have ben complaining for years that people do not save enough.

Not really, governments have been encouraging spending as we have been a service based economy for decades, as evidenced by the balance of payments deficits that accrued.  The difficulty is that the rich will save when they want the poor to save to reduce reliance on benefits, the benefits system hasn't been good in promoting people out of poverty. They have had some success introducing auto enrollment for pensions but that's a long term project and is only really trying to address the wholesale withdrawal of db pension schemes outside the public sector. Government approach hasn't varied dramatically over those decades be they labour or tory. 

It's always been reported that the typical UK household does not have enough emergency savings, we should be saving for retirement, but also saving for other things. So yes, I do believe my point still stands. The rhetoric to me has been that the government wants us to save and spend at the same time.

The Government is only interested in people having sufficient savings and pension provisions to avoid them claiming benefits. Beyond that, it's better for them if the money is spent or invested, preferably on things that generate further tax revenues. But yes, if they could have their cake and eat it too (by getting you to save and spend your money), then I'm sure they'd want that.

AlanP_2

I look at our Balance Sheet on a monthly basis  (Investments - Savings/PBs - Current Accounts less CC balances / mortgage).

I compare the Assets (excluding Investments) with the CC balances and if the number has gone up I have increased my Savings, if it has gone down I have spent some Savings (or will have a week or so later when the CC DD goes out).

To me it has absolutely nothing to do with whether it is in an account given the title Savings or Current by a bank, it is an indisputable fact as evidenced by the numbers.

Actively making a decision on where to keep that money is where the account / asset choices are made, but until you have some Savings the interest rate on offer is of no relevance at all and in my opinion has no impact on whether people save or not.

cricidmuslibale - Are you saying that you are spending more than your income each month and hence not saving, or, are you saying that your income exceeds your expenditure (and so you are saving) but are getting veryt little retrurn on it?

phillw

cricidmuslibale said:

My argument actually is that more people will be inclined to save when interest rates are higher. Very committed savers will still be inclined to save at the very lowest of interest rates but not all savers by any means fall into this category.

Anyone who has the choice between saving and spending and thinks "well at interest rates so low then I might as well just waste this money" is not worth rewarding. They will likely be parted from their money in other ways regardless.

phillw

snowqueen555 said:
Government seems to want it both ways. They want us to spend now, but have ben complaining for years that people do not save enough.

1. This government has been in power for less than a year.
2. The amount covid 19 has affected spending, it's like your doctor telling you that you're overweight & so you tell them that you won't eat anything at all then when they say that is not healthy then you complain the doctor wants it both ways.

phillw

grumiofoundation said:
I have had people tell me LISA 'wasn't worth it' when they could have got £1000s free from the goverment?

As I repeatedly miss out on every single thing the government introduce because I'm either a year too old or bought a property a year too early, then I don't care if people are too lazy to take them up because I am still taxed to fund them.

phillw

AlanP_2 said:

To me it has absolutely nothing to do with whether it is in an account given the title Savings or Current by a bank, it is an indisputable fact as evidenced by the numbers.

Yeah, I do roughly the same thing. I go deep and include utility bill credits/debits, paypal balance, upcoming ebay fees, nectar points, gift cards,  the euros I have left from holiday & cash I have in my wallet.

For a start it means that I remember them all, but also I can't cheat and go for a month using nectar points to fund my shopping and then claim "I saved so much money this month" (instead I used nectar double up to buy replacements for some worn out kitchen stuff that I'd need to replace soon).