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  • FIRST POST
    • Phil27356
    • By Phil27356 28th Feb 18, 12:36 PM
    • 12Posts
    • 3Thanks
    Phil27356
    Unexpected interest rate reduction
    • #1
    • 28th Feb 18, 12:36 PM
    Unexpected interest rate reduction 28th Feb 18 at 12:36 PM
    Just received this from the Coventry Building Society:

    This email is to let you know that we’re reducing the variable interest rate on this [30 day notice] account with effect from 16 March 2018.
    We realise that this isn’t good news for savers. However, as mortgage rates have continued to remain low, we’ve regretfully had to make the difficult decision to reduce the interest rates on some of our savings accounts.
    What this means
    As at the date of this email, the balance of this account was earning a variable rate of 1.49% gross p.a.** and from 16 March 2018 the new variable interest rate will be 1.34% gross p.a.

    Granted that as an relatively easy access account the rate doesn't appear too bad but I thought the current trend was for interest rates to go up! in fact this account saw an interest rate rise in Nov 17.
    Anybody out there with this account thinking of moving elsewhere, or already getting anything better (with full protection)?

    Thanks
Page 4
    • HUMBUG
    • By HUMBUG 13th Mar 18, 3:47 AM
    • 153 Posts
    • 32 Thanks
    HUMBUG
    However if you read the actual published facts and the less-sensationalist headlines, you can see that the financial institutions left money on the table and didn't choose to draw down as much cheap funding as the government was offering. They only borrowed what they thought was prudent given their business models.
    Example:
    http://www.cityam.com/281504/banks-leave-gbp13bn-cheap-money-term-funding-scheme-table

    Prudent ? £1billion . Lol . Who cares about their business models. They have manipulated rates at the expense of savers to subsidise borrowers (the majority of their customers are savers).


    Inflation has been relatively benign in the last decade compared to previous decades (perhaps your talk of manipulated low rates for over ten years really just means eight or nine years when the base rates hit the floor, as ten years ago they were fine).

    Inflation was higher than the manipulated lower saving rates , therefore we basically lost out.

    Putting all your life savings in cash and then "losing an absolute fortune" to inflation probably implies you weren't as smart as you should have been and didn't hold any 'investments', only a big pile of cash. So, if you have lost such a fortune:

    Who said I put my life savings in cash? Please defer from making wild assumptions about other posters.


    a) you should probably count yourself lucky that you had a fortune in ready cash. Most of us are not so fortunate as to have a fortune in cash;

    It all depends on what you define as a fortune? What do you define as a fortune? But it is quite easy to save if you work hard , don't waste it and pay off your debts (ie. mortgage ) early . Invest in AVC's if your employer offers them , take advantage of employee sharesave schemes. Use as much of your annual pension allowance to top up your pension. I'm sorry that you are not so fortunate to have a fortune in cash but hey! C'est la vie.

    b) maybe take some responsibility for your own situation yourself. Nobody owes you a living and if you had all your money in cash to watch it get eroded by inflation you should probably reflect on that and wonder why you didn't spread your assets across cash and diversified investment funds.
    Originally posted by bowlhead99
    You have a strange way with words. Its verges into a type of trolling and fishing style. I think you must be a banker or some independent financial advisor (or a poster boy for them). Sorry if I've hurt your feelings you poor soul. IMHO, if you want to invest in the stock market you may as well go to the local bookies. Haven't you read the small print "Remember funds can go down and you could lose your whole investment". Just keep plugging away advertising for the financial institutions and keep repeating the word 'diversification' . I'm sure by repeating it a zillions times some poor sucker will succumb to your 'expert' advice.
    Last edited by HUMBUG; 13-03-2018 at 3:50 AM.
    • bowlhead99
    • By bowlhead99 13th Mar 18, 7:58 AM
    • 7,833 Posts
    • 14,306 Thanks
    bowlhead99
    Prudent ? £1billion . Lol .
    Originally posted by HUMBUG
    When you are talking about the amount of money owned and used by people across the entire country, you do tend to get into the billions and trillions. Coventry has over £30 billion of mortgages and over £30bn of savers' deposits and competes with banks who have hundreds of billions on the balance sheets with several billion pounds of profit a year. One billion can still be a relatively modest amount of money in that context. They have a couple of billions in equity/reserves so that they can operate without significant risk of collapse.

    Obviously if you compare it to the amount of money you have in your personal bank account, it seems like a large amount of money. That doesn't mean they are scoundrels for operating in a world where the grand totals have lots of zeros on the end of the numbers, and should give the money to you.

    Who cares about their business models. They have manipulated rates at the expense of savers to subsidise borrowers (the majority of their customers are savers).
    The business model is basically how they exist.

    So when you say "they should pay me more interest" a sensible response would be "why should they pay you more interest?". If your response to that is along the lines of "Who cares about their business model, they just need to give me more money", it shows naivety. They are not going to break the business model that services 1-2 million members just to give the savers higher interest, as then they would have to charge more money to the mortgage borrowers and the mortgage borrowers would be able to find relatively better deals elsewhere so they might walk away and then all of a sudden they don't want to pay you any interest because they don't need your cash - as they don't have anyone wanting to borrow any mortgage money.

    Generally, the reason a building society is created in the first place is to provide home mortgages to members. A society for building. While there may be more saver-members than borrower-members at a point in time - because households on the whole have lower amounts of spare cash to deposit in savings accounts than they have mortgage balances - that doesn't mean they should pander to the savers at expense of the borrowers just because there are a greater quantity of savers. It is the existence of a lending business that allows the savings side to exist.

    Who said I put my life savings in cash? Please defer from making wild assumptions about other posters.
    It all depends on what you define as a fortune? What do you define as a fortune? But it is quite easy to save if you work hard , don't waste it and pay off your debts (ie. mortgage ) early . Invest in AVC's if your employer offers them , take advantage of employee sharesave schemes. Use as much of your annual pension allowance to top up your pension. I'm sorry that you are not so fortunate to have a fortune in cash but hey! C'est la vie.
    You mentioned that savers had 'lost an absolute fortune' due to the decrease in interest rates.

    My first observation was merely that if you have lost an absolute fortune, you are luckier than those who did not have a fortune to lose in the first place.

    And my second was if you have lose a fortune because of having a high proportion of your wealth in cash, which has been eroded in value through inflation and lost its income-producing properties due to lower rates, then your choice to be the sort of person who has a fortune but puts all or most of it in cash, is a bit naive.

    You are right that it 'depends on what you define as a fortune' but you are the one saying that savers (I presumed including yourself) have lost a fortune. If you didn't have a fortune, and you didn't put all or most of it in cash, you would not have lost a fortune, and then we don't need to be so dramatic.

    You have a strange way with words. Its verges into a type of trolling and fishing style. I think you must be a banker or some independent financial advisor (or a poster boy for them).
    I'm neither, but I make myself aware of how the financial world works so that when I make comments on savings and investment forums they're not ill-informed comments.

    You are the one coming on here with the sensationalist headlines of how banks and building societies are gorging themselves and how you are getting stung with double whammies and people are robbing you by stealth. Such inflammatory language might be seen in some quarters as trolling to provoke a reaction. Similarly saying that someone must be a banker or IFA or poster boy because you believe them to be trolling or fishing, is in itself a trolling / fishing comment. The person who calmly tries to give you some facts as a counterpoint, is not the troll.

    Sorry if I've hurt your feelings you poor soul.
    Yes, that looks like a comment learned at junior troll class in Trolling 101.

    IMHO, if you want to invest in the stock market you may as well go to the local bookies. Haven't you read the small print "Remember funds can go down and you could lose your whole investment". Just keep plugging away advertising for the financial institutions and keep repeating the word 'diversification' .
    So what you are saying is that the stock market should be avoided as it's no better for your wealth than the bookies.

    The difference is that with the bookies you have a negative expectation because the 'house' has an edge and graduallly eats away at your money. Whereas with investment funds buying and holding assets in the stock market, you gradually receive money as your assets are invested in the global economy which is productive and grows. So the value of an investment can be volatile but it's the opposite of going to the bookies. The markets are substantially up rather than down over the last hundred years, and will be over the next hundred too, unless the world as we know it collapses into an apocalypse. Meanwhile the stock markets, which go up in value over the long term, have also been paying dividends along the way.

    On the one hand, you are saying that we should avoid the stock market because as the risk warnings tell us, we will lose our money. By implication we should avoid investing in funds/stocks/equities and keep our money in other things instead, like cash savings. When I say it's your own fault if you pile all your money into cash savings and you lose value due to inflation or declining interest rates because you are not diversified, you say I should not presume to judge you - your recommendations are to invest in employer AVCs, sharesave schemes and use as much of your annual pension allowance as possible to top up your pension.

    But surely you understand that the way the AVCs, sharesave schemes and pensions make money which outpaces inflation over time, for them to be worth buying into, is by... investing in the stock market.

    You know, that stock market that you told us not to invest into because in your 'humble opnion' you may as well go to the bookies?

    So you will hide behind your use of the stock market as a diversified store of wealth and creator of growth if you call it an AVC or a pension or a sharesave - while telling everyone else that they should avoid the stock market and portray me as a charlatan for suggesting diversified investment, writing me off as an advertisement for investment funds and the financial services industry, and a troll. Ah well, it takes all sorts to make a world.

    I'm sure by repeating it a zillions times some poor sucker will succumb to your 'expert' advice.
    Your posts are often complaints or taking an opportunity to ridicule someone for being a suspected banker; meanwhile, over 70% of my posts on this board in the last decade or so have received a 'thanks' click, so I'm presuming that of those 5300 thanked posts there is at least someone out there who took my advice or guidance and saved themselves some money or improved their prospects.

    In fact I know that to be the case based on direct messages received (assuming they are not all lies) - my PM inbox is generally pretty full. Hopefully those people are not all being led astray but I would generally encourage people to think for themselves rather than latch on to one troll or another on either side of an argument.
    Last edited by bowlhead99; 13-03-2018 at 10:29 PM.
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