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

grumiofoundation

cricidmuslibale said:

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!

Thrift and saving is rewarding -  the reward is you have more money. 

The interest you get on that money is secondary really. Not much point having a 5% savings account if you dont save any money in it and spend it instead. 

Alexland

With NS&I maybe a legal minimum level of customer service might help?

cricidmuslibale

Thrift and saving is rewarding -  the reward is you have more money. 

The interest you get on that money is secondary really. Not much point having a 5% savings account if you dont save any money in it and spend it instead. 

Yes up to a point! But the 'more money' (the capital) is of course worth less and less as time goes on (unless there is a prolonged period of deflation rather than inflation which is very rare.) A 5% savings account seems like a pipe dream now, there hasn't been one for quite some time and whether there will ever be one again is very sadly, these days, something that many necessarily risk-averse savers may be asking? 

EdGasketTheSecond

Thrugelmir said:

EdGasketTheSecond said:

Thrift and saving should be rewarded.

Reward should come from taking a risk. 

So hard work and saving shouldn't count for anything then? What you manage to save up should be lost to inflation unless you gamble with it? Doesn't sound right or desirable to me but its where we are.

John_

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.

No, it’s an absolutely ludicrous idea. If you don’t find the interest rate attractive then don’t save with them.

cricidmuslibale

Thrugelmir said:

EdGasketTheSecond said:

Thrift and saving should be rewarded.

Reward should come from taking a risk. 

So hard work and saving shouldn't count for anything then? What you manage to save up should be lost to inflation unless you gamble with it? Doesn't sound right or desirable to me but its where we are.

I couldn't agree more! Some savers, for moral and/or religious reasons, will never feel at all comfortable with any form of gambling on their savings! For some, any form of gambling is either forbidden entirely or at least heavily discouraged!

John_

EdGasketTheSecond said:

Thrugelmir said:

EdGasketTheSecond said:

Thrift and saving should be rewarded.

Reward should come from taking a risk. 

So hard work and saving shouldn't count for anything then? What you manage to save up should be lost to inflation unless you gamble with it? Doesn't sound right or desirable to me but its where we are.

Where should the money come from to pay you your rate of interest? 

Thrugelmir

EdGasketTheSecond said:

Thrugelmir said:

EdGasketTheSecond said:

Thrift and saving should be rewarded.

Reward should come from taking a risk. 

So hard work and saving shouldn't count for anything then? What you manage to save up should be lost to inflation unless you gamble with it? Doesn't sound right or desirable to me but its where we are.

Savers are indirectly lending money to another party with zero risk. Someone has to pay the cost of administration and / or default.  

cricidmuslibale

John_ said:

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.

No, it’s an absolutely ludicrous idea. If you don’t find the interest rate attractive then don’t save with them.

You may disagree with me wholeheartedly, that's absolutely fine, but to call my suggestion ludicrous is a little bit strong surely!

NottinghamKnight

The thing is that real interest rates aren't that low, ignoring QE of course. Inflation is near zero and so are no risk returns.