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

cricidmuslibale

Another_Saver said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

John_ said:

cricidmuslibale said:

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!

I don’t think so, it’s not a million miles from saying that a doctor should have a legal requirement to make you well.
Where would the money come from to pay you this interest? Who would you be taking it off? 

In NS&I's case at least, when you are only talking about a minimum of 0.5% for fixed rate accounts that can easily come from the vast amount of money NS&I are now saving from paying only CPI plus 0.01% rather than RPI plus 0.01% on recently renewed Index Linked Savings Certificates! CPI is nearly always significantly lower than RPI and is currently only 0.7% (if I remember correctly). 

You want the taxpayer to provide a legal minimum interest rate. You've just found a different way of saying it.

The root cause of the 'problem' is you want to lend your money out at an interest rate which no borrower is willing to pay. Interest rates have been on a downward trajectory for decades - it shouldn't really be a surprise that they ended up (if it is the end) around zero.

It is a pretty sorry state of affairs when no borrower is willing to pay an interest rate of merely 0.5%! For goodness sake what is the world coming to!? Not very long ago at all 0.5% would have been rightly regarded as an absolutely derisory rate to be paying for a fixed rate savings account where you have guaranteed the borrower use of your capital for usually a minimum of a year! Just because interest rates have been on a downward trajectory for decades doesn't make it either right or at all acceptable for this to continue so that there is absolutely no incentive for anyone to save whatsoever!         
  
At the end of the day saving is all about taking personal responsibility, not spending any more than you need to now because unexpected, unavoidable expenses are bound to occur later on. And, crucially, not having to rely on the state to bail you out in times of most need! Even in this far from perfect world, everyone should be encouraged to save wherever possible but most people simply won't do it if they are going to get absolutely nothing for it in return! In fact worse than that they will probably end up with their capital having lost a considerable amount of its value due to inflation as well. Zero interest rates for savers, other than as a very temporary blip, would be imho completely and utterly unacceptable, in fact an absolutely disgraceful state of affairs!

Given you were pondering a 50 mile round trip to open a 1.25% regular saver earlier you are obviously incentivised to save for reasons other than the intertest.

What are those reasons?

But this ultimately is not about me at all! It's about encourage a healthy savings culture in the general populace, many of whom don't save often enough or regularly enough and then have to rely on the state for support or handouts in times of need. Of course some people simply can't afford to save much if anything at all at the moment and that's why we need a properly functioning welfare state as a cushion so that very poor people don't fall into severe hardship. But those that can afford to save should and this should be encouraged as a very good thing to do from school age onwards. Realistically though many people simply will not do so for less than nothing (taking in account capital value erosion due to inflation) in return! 

I don't understand why you think people won't save because of low interest rates when you yourself are an example of the opposite.

Look it's common knowledge that the lower savings interest rates are in general the less likely most people are to save rather than to spend or just leave their money wasting away in their current accounts!  I'm not an example of the opposite at all, I save a lot more when interest rates are half decent than I do when they are utterly derisory!

... It's not common knowledge and the opposite is true. Rates are low because there are so many 1960s boomers with so much savings relative to the younger part of the population who tend to do the borrowing...

You have entirely misunderstood my point! I was talking about the fact that once lower savings interest rates become the norm many people who are not naturally inclined to understand the importance of saving for their future will either save less or, worse still, not save at all because they see no incentive for them to do so!  Then in times of most need they will have no choice but to turn to the state for aid because they haven't previously saved enough or in some cases anything at all! 

cricidmuslibale

Prism said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

John_ said:

cricidmuslibale said:

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!

I don’t think so, it’s not a million miles from saying that a doctor should have a legal requirement to make you well.
Where would the money come from to pay you this interest? Who would you be taking it off? 

In NS&I's case at least, when you are only talking about a minimum of 0.5% for fixed rate accounts that can easily come from the vast amount of money NS&I are now saving from paying only CPI plus 0.01% rather than RPI plus 0.01% on recently renewed Index Linked Savings Certificates! CPI is nearly always significantly lower than RPI and is currently only 0.7% (if I remember correctly). 

You want the taxpayer to provide a legal minimum interest rate. You've just found a different way of saying it.

The root cause of the 'problem' is you want to lend your money out at an interest rate which no borrower is willing to pay. Interest rates have been on a downward trajectory for decades - it shouldn't really be a surprise that they ended up (if it is the end) around zero.

It is a pretty sorry state of affairs when no borrower is willing to pay an interest rate of merely 0.5%! For goodness sake what is the world coming to!? Not very long ago at all 0.5% would have been rightly regarded as an absolutely derisory rate to be paying for a fixed rate savings account where you have guaranteed the borrower use of your capital for usually a minimum of a year! Just because interest rates have been on a downward trajectory for decades doesn't make it either right or at all acceptable for this to continue so that there is absolutely no incentive for anyone to save whatsoever!         
  
At the end of the day saving is all about taking personal responsibility, not spending any more than you need to now because unexpected, unavoidable expenses are bound to occur later on. And, crucially, not having to rely on the state to bail you out in times of most need! Even in this far from perfect world, everyone should be encouraged to save wherever possible but most people simply won't do it if they are going to get absolutely nothing for it in return! In fact worse than that they will probably end up with their capital having lost a considerable amount of its value due to inflation as well. Zero interest rates for savers, other than as a very temporary blip, would be imho completely and utterly unacceptable, in fact an absolutely disgraceful state of affairs!

Given you were pondering a 50 mile round trip to open a 1.25% regular saver earlier you are obviously incentivised to save for reasons other than the intertest.

What are those reasons?

But this ultimately is not about me at all! It's about encourage a healthy savings culture in the general populace, many of whom don't save often enough or regularly enough and then have to rely on the state for support or handouts in times of need. Of course some people simply can't afford to save much if anything at all at the moment and that's why we need a properly functioning welfare state as a cushion so that very poor people don't fall into severe hardship. But those that can afford to save should and this should be encouraged as a very good thing to do from school age onwards. Realistically though many people simply will not do so for less than nothing (taking in account capital value erosion due to inflation) in return! 

I don't understand why you think people won't save because of low interest rates when you yourself are an example of the opposite.

Look it's common knowledge that the lower savings interest rates are in general the less likely most people are to save rather than to spend or just leave their money wasting away in their current accounts!  I'm not an example of the opposite at all, I save a lot more when interest rates are half decent than I do when they are utterly derisory!

Well you are acting like the government wants you to then. It wants people to spend money to stimulate the economy along with the other benefits of low interest rates like fewer mortgage defaults and stronger business growth.

COVID has, due to being a freelancer who doesn't qualify for any Government financial support, currently deprived me of most of my income through earnings! Thus I am eating into my capital as well as using all my available savings interest to pay essential expenses like household bills. This is not discretionary spending at all! The idea that all savers are doing relatively well in this pandemic situation is very far from the case!

cricidmuslibale

eskbanker said:

cricidmuslibale said:

eskbanker said:

cricidmuslibale said:

eskbanker said:

cricidmuslibale said:
Zero interest rates for savers, other than as a very temporary blip, would be imho completely and utterly unacceptable, in fact an absolutely disgraceful state of affairs!

Are you a sub-editor for the Daily Mail by any chance?  That seems to be just the kind of indignant outrage rhetoric that their readers lap up, despite it being pointlessly futile....

Goodness me no! I can't stand the Daily Mail! I'm actually a liberal and a centrist, not a hard right winger. But I will always stand up for savers because they have overall had a very hard time since about 2009 through absolutely no fault of their own and they deserve so so much better treatment than they are currently getting!

Yes, I wasn't actually referring to the DM's politics as such, more the reactionary why-oh-whining style - 'standing up for savers' sounds very noble but if you're just essentially standing on a soapbox ranting about how unfair everything is then that doesn't actually achieve anything!  Are you engaging with NS&I on this, or your MP about government policy, etc?

Yes I regularly engage with NS&I and, if they have carefully read what I have written to them so far, then they will know exactly how I feel on this issue! I wouldn't surprise me at all if many other long-term and indeed short-term NS&I savers will have contacted them with very similar viewpoints to mine. And yes I regularly contact both my MP and local councillors where I live about various aspects of government policy including this issue clearly. I strongly object to the phrase 'reactionary why-oh-whining style'; having strong views about something you firmly believe to be amiss and then suggesting how the 'problem' may be overcome is not the same as mere whining at all!

Fair enough - if there are actions matching the words then that is indeed a more constructive approach, although it still doesn't detract from the fact that the extravagantly anguished and heavily-highlighted words you chose were a tad excessive if you want your point to be taken seriously!  Have you had explanations from those you've pursued about why your simplistic 'solutions' aren't practical or appropriate?

No I've had no such explanations because my 'solutions', far from being simplistic, are entirely feasible if the political will is there to implement them and the current economic climate allows them to take place. If the political will isn't currently there or the current economic climate is unfavourable at present then this will not be the case for ever because economies naturally evolve over time and if enough people feel as I do and are prepared to vote accordingly then eventually the people that matter will listen, understand and realise the importance of the general public, not just committed savers, saving for those unavoidable expenses that we all face at some time or other, and not then having to rely on the state in the bad times due to a lack of saving in the good times.

Prism

cricidmuslibale said:

Prism said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

John_ said:

cricidmuslibale said:

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!

I don’t think so, it’s not a million miles from saying that a doctor should have a legal requirement to make you well.
Where would the money come from to pay you this interest? Who would you be taking it off? 

In NS&I's case at least, when you are only talking about a minimum of 0.5% for fixed rate accounts that can easily come from the vast amount of money NS&I are now saving from paying only CPI plus 0.01% rather than RPI plus 0.01% on recently renewed Index Linked Savings Certificates! CPI is nearly always significantly lower than RPI and is currently only 0.7% (if I remember correctly). 

You want the taxpayer to provide a legal minimum interest rate. You've just found a different way of saying it.

The root cause of the 'problem' is you want to lend your money out at an interest rate which no borrower is willing to pay. Interest rates have been on a downward trajectory for decades - it shouldn't really be a surprise that they ended up (if it is the end) around zero.

It is a pretty sorry state of affairs when no borrower is willing to pay an interest rate of merely 0.5%! For goodness sake what is the world coming to!? Not very long ago at all 0.5% would have been rightly regarded as an absolutely derisory rate to be paying for a fixed rate savings account where you have guaranteed the borrower use of your capital for usually a minimum of a year! Just because interest rates have been on a downward trajectory for decades doesn't make it either right or at all acceptable for this to continue so that there is absolutely no incentive for anyone to save whatsoever!         
  
At the end of the day saving is all about taking personal responsibility, not spending any more than you need to now because unexpected, unavoidable expenses are bound to occur later on. And, crucially, not having to rely on the state to bail you out in times of most need! Even in this far from perfect world, everyone should be encouraged to save wherever possible but most people simply won't do it if they are going to get absolutely nothing for it in return! In fact worse than that they will probably end up with their capital having lost a considerable amount of its value due to inflation as well. Zero interest rates for savers, other than as a very temporary blip, would be imho completely and utterly unacceptable, in fact an absolutely disgraceful state of affairs!

Given you were pondering a 50 mile round trip to open a 1.25% regular saver earlier you are obviously incentivised to save for reasons other than the intertest.

What are those reasons?

But this ultimately is not about me at all! It's about encourage a healthy savings culture in the general populace, many of whom don't save often enough or regularly enough and then have to rely on the state for support or handouts in times of need. Of course some people simply can't afford to save much if anything at all at the moment and that's why we need a properly functioning welfare state as a cushion so that very poor people don't fall into severe hardship. But those that can afford to save should and this should be encouraged as a very good thing to do from school age onwards. Realistically though many people simply will not do so for less than nothing (taking in account capital value erosion due to inflation) in return! 

I don't understand why you think people won't save because of low interest rates when you yourself are an example of the opposite.

Look it's common knowledge that the lower savings interest rates are in general the less likely most people are to save rather than to spend or just leave their money wasting away in their current accounts!  I'm not an example of the opposite at all, I save a lot more when interest rates are half decent than I do when they are utterly derisory!

Well you are acting like the government wants you to then. It wants people to spend money to stimulate the economy along with the other benefits of low interest rates like fewer mortgage defaults and stronger business growth.

COVID has, due to being a freelancer who doesn't qualify for any Government financial support, currently deprived me of most of my income through earnings! Thus I am eating into my capital as well as using all my available savings interest to pay essential expenses like household bills. This is not discretionary spending at all! The idea that all savers are doing relatively well in this pandemic situation is very far from the case!

I am also a contractor who has had no Government support. I also have had almost no income this year and have been eating into my savings which I have kept in a 0% interest bank account for the last few years. Those savings and the reason I built them up was entirely for reasons like this year. The interest rate had nothing to do with my motivations. And just to put it into perspective I am around 30k down on where I should be for this financial year. 1-2% of interest is neither here nor there.

I am very glad that the interest rates are low and that this was used to help fund government support. Not for me but for my customers. They are still there rather than going bust. They have used the cheap debt to survive, and because they survive, I survive. I would be perfectly happy with these lows rates until the economy recovers.

cricidmuslibale

That's all good! I am happy with low interest rates until the economy recovers too. Most people would fairly regard 0.5% as a very low interest rate for a fixed term investment.

Thrugelmir

Another_Saver said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

John_ said:

cricidmuslibale said:

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!

I don’t think so, it’s not a million miles from saying that a doctor should have a legal requirement to make you well.
Where would the money come from to pay you this interest? Who would you be taking it off? 

In NS&I's case at least, when you are only talking about a minimum of 0.5% for fixed rate accounts that can easily come from the vast amount of money NS&I are now saving from paying only CPI plus 0.01% rather than RPI plus 0.01% on recently renewed Index Linked Savings Certificates! CPI is nearly always significantly lower than RPI and is currently only 0.7% (if I remember correctly). 

You want the taxpayer to provide a legal minimum interest rate. You've just found a different way of saying it.

The root cause of the 'problem' is you want to lend your money out at an interest rate which no borrower is willing to pay. Interest rates have been on a downward trajectory for decades - it shouldn't really be a surprise that they ended up (if it is the end) around zero.

It is a pretty sorry state of affairs when no borrower is willing to pay an interest rate of merely 0.5%! For goodness sake what is the world coming to!? Not very long ago at all 0.5% would have been rightly regarded as an absolutely derisory rate to be paying for a fixed rate savings account where you have guaranteed the borrower use of your capital for usually a minimum of a year! Just because interest rates have been on a downward trajectory for decades doesn't make it either right or at all acceptable for this to continue so that there is absolutely no incentive for anyone to save whatsoever!         
  
At the end of the day saving is all about taking personal responsibility, not spending any more than you need to now because unexpected, unavoidable expenses are bound to occur later on. And, crucially, not having to rely on the state to bail you out in times of most need! Even in this far from perfect world, everyone should be encouraged to save wherever possible but most people simply won't do it if they are going to get absolutely nothing for it in return! In fact worse than that they will probably end up with their capital having lost a considerable amount of its value due to inflation as well. Zero interest rates for savers, other than as a very temporary blip, would be imho completely and utterly unacceptable, in fact an absolutely disgraceful state of affairs!

Given you were pondering a 50 mile round trip to open a 1.25% regular saver earlier you are obviously incentivised to save for reasons other than the intertest.

What are those reasons?

But this ultimately is not about me at all! It's about encourage a healthy savings culture in the general populace, many of whom don't save often enough or regularly enough and then have to rely on the state for support or handouts in times of need. Of course some people simply can't afford to save much if anything at all at the moment and that's why we need a properly functioning welfare state as a cushion so that very poor people don't fall into severe hardship. But those that can afford to save should and this should be encouraged as a very good thing to do from school age onwards. Realistically though many people simply will not do so for less than nothing (taking in account capital value erosion due to inflation) in return! 

I don't understand why you think people won't save because of low interest rates when you yourself are an example of the opposite.

Look it's common knowledge that the lower savings interest rates are in general the less likely most people are to save rather than to spend or just leave their money wasting away in their current accounts!  I'm not an example of the opposite at all, I save a lot more when interest rates are half decent than I do when they are utterly derisory!

... It's not common knowledge and the opposite is true. Rates are low because there are so many 1960s boomers with so much savings relative to the younger part of the population who tend to do the borrowing...

Seems as if the the savings rate has risen from 6% to 28% of income. Nothing to do with boomers. More to do with people on furlough not spending anything. 

John_

EdGasketTheSecond said:

John_ said:

EdGasketTheSecond said:

Look you don't understand do you? The FED and central banks are forcing low interest rates and doing QE; it is NOT the free market behaving as it should.

The fed has zero to do with the rates that the OP is getting on his GBP savings.

I suppose that being unemployed has given you time to pick up some bits and pieces from the internet, but that’s no basis for a real understanding.

May I suggest you put the time and effort into finding work instead?

That is where you are wrong my friend. Where the FED goes, others follow.

When did markets turn around in March? Was it the B of E. or the FED that caused the turnaround?

Obviously if the FED decides on near zero interest rates then the UK is not going to be able to have any 'normal' interest rate as the pound would be far too strong in that scenario. The financial world is all interlinked and the FED sets the general tone.

May I suggest you put the time and effort into learning some basic macro-economics instead of researching the employment status of posters?

I’m an interest rates trader. I earn my living by being an expert in macroeconomics and interest rates.

I’ll give the ramblings of a man on the dole due weight though.

cricidmuslibale

Prism said:

cricidmuslibale said:

Prism said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

John_ said:

cricidmuslibale said:

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!

I don’t think so, it’s not a million miles from saying that a doctor should have a legal requirement to make you well.
Where would the money come from to pay you this interest? Who would you be taking it off? 

In NS&I's case at least, when you are only talking about a minimum of 0.5% for fixed rate accounts that can easily come from the vast amount of money NS&I are now saving from paying only CPI plus 0.01% rather than RPI plus 0.01% on recently renewed Index Linked Savings Certificates! CPI is nearly always significantly lower than RPI and is currently only 0.7% (if I remember correctly). 

You want the taxpayer to provide a legal minimum interest rate. You've just found a different way of saying it.

The root cause of the 'problem' is you want to lend your money out at an interest rate which no borrower is willing to pay. Interest rates have been on a downward trajectory for decades - it shouldn't really be a surprise that they ended up (if it is the end) around zero.

It is a pretty sorry state of affairs when no borrower is willing to pay an interest rate of merely 0.5%! For goodness sake what is the world coming to!? Not very long ago at all 0.5% would have been rightly regarded as an absolutely derisory rate to be paying for a fixed rate savings account where you have guaranteed the borrower use of your capital for usually a minimum of a year! Just because interest rates have been on a downward trajectory for decades doesn't make it either right or at all acceptable for this to continue so that there is absolutely no incentive for anyone to save whatsoever!         
  
At the end of the day saving is all about taking personal responsibility, not spending any more than you need to now because unexpected, unavoidable expenses are bound to occur later on. And, crucially, not having to rely on the state to bail you out in times of most need! Even in this far from perfect world, everyone should be encouraged to save wherever possible but most people simply won't do it if they are going to get absolutely nothing for it in return! In fact worse than that they will probably end up with their capital having lost a considerable amount of its value due to inflation as well. Zero interest rates for savers, other than as a very temporary blip, would be imho completely and utterly unacceptable, in fact an absolutely disgraceful state of affairs!

Given you were pondering a 50 mile round trip to open a 1.25% regular saver earlier you are obviously incentivised to save for reasons other than the intertest.

What are those reasons?

But this ultimately is not about me at all! It's about encourage a healthy savings culture in the general populace, many of whom don't save often enough or regularly enough and then have to rely on the state for support or handouts in times of need. Of course some people simply can't afford to save much if anything at all at the moment and that's why we need a properly functioning welfare state as a cushion so that very poor people don't fall into severe hardship. But those that can afford to save should and this should be encouraged as a very good thing to do from school age onwards. Realistically though many people simply will not do so for less than nothing (taking in account capital value erosion due to inflation) in return! 

I don't understand why you think people won't save because of low interest rates when you yourself are an example of the opposite.

Look it's common knowledge that the lower savings interest rates are in general the less likely most people are to save rather than to spend or just leave their money wasting away in their current accounts!  I'm not an example of the opposite at all, I save a lot more when interest rates are half decent than I do when they are utterly derisory!

Well you are acting like the government wants you to then. It wants people to spend money to stimulate the economy along with the other benefits of low interest rates like fewer mortgage defaults and stronger business growth.

COVID has, due to being a freelancer who doesn't qualify for any Government financial support, currently deprived me of most of my income through earnings! Thus I am eating into my capital as well as using all my available savings interest to pay essential expenses like household bills. This is not discretionary spending at all! The idea that all savers are doing relatively well in this pandemic situation is very far from the case!

I am also a contractor who has had no Government support. I also have had almost no income this year and have been eating into my savings which I have kept in a 0% interest bank account for the last few years. Those savings and the reason I built them up was entirely for reasons like this year. The interest rate had nothing to do with my motivations. And just to put it into perspective I am around 30k down on where I should be for this financial year. 1-2% of interest is neither here nor there.

I'm genuinely sorry for your massive financial loss of earnings this year! Why though did you keep your savings in a 0% interest bank account for the last few years? Is it because you have a moral or religious objection to savings interest? - perfectly understandable if you do if course.

Prism

cricidmuslibale said:

Prism said:

cricidmuslibale said:

Prism said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

Sailtheworld said:

cricidmuslibale said:

John_ said:

cricidmuslibale said:

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!

I don’t think so, it’s not a million miles from saying that a doctor should have a legal requirement to make you well.
Where would the money come from to pay you this interest? Who would you be taking it off? 

In NS&I's case at least, when you are only talking about a minimum of 0.5% for fixed rate accounts that can easily come from the vast amount of money NS&I are now saving from paying only CPI plus 0.01% rather than RPI plus 0.01% on recently renewed Index Linked Savings Certificates! CPI is nearly always significantly lower than RPI and is currently only 0.7% (if I remember correctly). 

You want the taxpayer to provide a legal minimum interest rate. You've just found a different way of saying it.

The root cause of the 'problem' is you want to lend your money out at an interest rate which no borrower is willing to pay. Interest rates have been on a downward trajectory for decades - it shouldn't really be a surprise that they ended up (if it is the end) around zero.

It is a pretty sorry state of affairs when no borrower is willing to pay an interest rate of merely 0.5%! For goodness sake what is the world coming to!? Not very long ago at all 0.5% would have been rightly regarded as an absolutely derisory rate to be paying for a fixed rate savings account where you have guaranteed the borrower use of your capital for usually a minimum of a year! Just because interest rates have been on a downward trajectory for decades doesn't make it either right or at all acceptable for this to continue so that there is absolutely no incentive for anyone to save whatsoever!         
  
At the end of the day saving is all about taking personal responsibility, not spending any more than you need to now because unexpected, unavoidable expenses are bound to occur later on. And, crucially, not having to rely on the state to bail you out in times of most need! Even in this far from perfect world, everyone should be encouraged to save wherever possible but most people simply won't do it if they are going to get absolutely nothing for it in return! In fact worse than that they will probably end up with their capital having lost a considerable amount of its value due to inflation as well. Zero interest rates for savers, other than as a very temporary blip, would be imho completely and utterly unacceptable, in fact an absolutely disgraceful state of affairs!

Given you were pondering a 50 mile round trip to open a 1.25% regular saver earlier you are obviously incentivised to save for reasons other than the intertest.

What are those reasons?

But this ultimately is not about me at all! It's about encourage a healthy savings culture in the general populace, many of whom don't save often enough or regularly enough and then have to rely on the state for support or handouts in times of need. Of course some people simply can't afford to save much if anything at all at the moment and that's why we need a properly functioning welfare state as a cushion so that very poor people don't fall into severe hardship. But those that can afford to save should and this should be encouraged as a very good thing to do from school age onwards. Realistically though many people simply will not do so for less than nothing (taking in account capital value erosion due to inflation) in return! 

I don't understand why you think people won't save because of low interest rates when you yourself are an example of the opposite.

Look it's common knowledge that the lower savings interest rates are in general the less likely most people are to save rather than to spend or just leave their money wasting away in their current accounts!  I'm not an example of the opposite at all, I save a lot more when interest rates are half decent than I do when they are utterly derisory!

Well you are acting like the government wants you to then. It wants people to spend money to stimulate the economy along with the other benefits of low interest rates like fewer mortgage defaults and stronger business growth.

COVID has, due to being a freelancer who doesn't qualify for any Government financial support, currently deprived me of most of my income through earnings! Thus I am eating into my capital as well as using all my available savings interest to pay essential expenses like household bills. This is not discretionary spending at all! The idea that all savers are doing relatively well in this pandemic situation is very far from the case!

I am also a contractor who has had no Government support. I also have had almost no income this year and have been eating into my savings which I have kept in a 0% interest bank account for the last few years. Those savings and the reason I built them up was entirely for reasons like this year. The interest rate had nothing to do with my motivations. And just to put it into perspective I am around 30k down on where I should be for this financial year. 1-2% of interest is neither here nor there.

I'm genuinely sorry for your massive financial loss of earnings this year! Why though did you keep your savings in a 0% interest bank account for the last few years? Is it because you have a moral or religious objection to savings interest? - perfectly understandable if you do if course.

Its a business, I don't think of it as my money if I can help it. Its in a business bank account which doesn't pay interest. At least I am not paying a charge which most accounts have. It needs to be liquid for situations like this so no fixed savings.

My actual income is unchanged this year because of those savings. If anything I am better off as I have spent less. Anyway the point is that it is entirely possible to save up at 0% rates if that is what is available.

naedanger

John_ said:

EdGasketTheSecond said:

John_ said:

EdGasketTheSecond said:

Look you don't understand do you? The FED and central banks are forcing low interest rates and doing QE; it is NOT the free market behaving as it should.

The fed has zero to do with the rates that the OP is getting on his GBP savings.

I suppose that being unemployed has given you time to pick up some bits and pieces from the internet, but that’s no basis for a real understanding.

May I suggest you put the time and effort into finding work instead?

That is where you are wrong my friend. Where the FED goes, others follow.

When did markets turn around in March? Was it the B of E. or the FED that caused the turnaround?

Obviously if the FED decides on near zero interest rates then the UK is not going to be able to have any 'normal' interest rate as the pound would be far too strong in that scenario. The financial world is all interlinked and the FED sets the general tone.

May I suggest you put the time and effort into learning some basic macro-economics instead of researching the employment status of posters?

I’m an interest rates trader. I earn my living by being an expert in macroeconomics and interest rates.

I’ll give the ramblings of a man on the dole due weight though.

An interest rates trader who doesn't understand the role of central banks.