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  • FIRST POST
    • george4064
    • By george4064 15th May 18, 1:58 PM
    • 936Posts
    • 1,017Thanks
    george4064
    Interest rates: What was it like back in the day?
    • #1
    • 15th May 18, 1:58 PM
    Interest rates: What was it like back in the day? 15th May 18 at 1:58 PM
    I'm a 'nineties kid', so I've only ever really known interest rates to be very low (<1%), and on average saving accounts paying around 1.25% interest.


    So, what was it like back in the day when the official interest rate was 5%? or 10%? What was the average savings account paying?


    Also, another theoretical question which I've been wondering about: whats stopping me from putting my money into a Vietnamese savings account and taking advantage of their 6.25% official interest rate?


    Thanks in advance and I look forward to reading your responses!
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Page 2
    • eskbanker
    • By eskbanker 15th May 18, 5:40 PM
    • 7,091 Posts
    • 7,515 Thanks
    eskbanker
    Yeh it was the same year were wage inflation peaked at 30%.
    Originally posted by spadoosh
    Indeed - the equivalent ONS data shows a 29.4% peak in 1975 (the stats only seem to be annual rather than monthly):



    interest rates are all relative to inflation
    Originally posted by Stubod
    Theyre not. How do you explain increased inflation recently?
    Originally posted by spadoosh
    I could be wrong but didn't read Stubod's comment as suggesting a direct correlation (which, as you say, doesn't exist), but meaning that interest rates shouldn't be considered in isolation from inflation rates....
    • Stubod
    • By Stubod 15th May 18, 6:18 PM
    • 478 Posts
    • 328 Thanks
    Stubod
    I could be wrong but didn't read Stubod's comment as suggesting a direct correlation (which, as you say, doesn't exist), but meaning that interest rates shouldn't be considered in isolation from inflation rates....
    Originally posted by eskbanker
    ..thanks for the clarification, I was not suggesting any link between the 2....just that you need to consider them both....
    • AnotherJoe
    • By AnotherJoe 15th May 18, 7:54 PM
    • 9,367 Posts
    • 10,325 Thanks
    AnotherJoe
    I thought it might be something to do with FX movements and inflation, however (easier said than done) couldn't someone just put a load of money into Dong and Vietnamese banks and hedge back the exposure?
    Originally posted by george4064

    This can all be summed up by the phrase "no such thing as a free lunch".

    Or in other words, no baldrick your cunning plan has more holes in it than one of mrs midgleys pies after it's been left in the cellar with rats overnight
    • LHW99
    • By LHW99 15th May 18, 8:25 PM
    • 1,278 Posts
    • 1,177 Thanks
    LHW99
    Only thing I did used to do in the late 80's to 90's was to pay most of my wages directly into as high an interest rate savings account as I could find. Live off the credit card for a month, and pay the cc bill off in full just before the next pay cheque was due. In those days it added a reasonable amount of interest to what was earned on "real" savings.
    Mortgage rates were horrible from the mid 70's really until the end of the nineties though and you relied on the inflation to eat away at the bill as said above.
    • Thrugelmir
    • By Thrugelmir 15th May 18, 8:52 PM
    • 58,448 Posts
    • 51,817 Thanks
    Thrugelmir
    How do you explain increased inflation recently?
    Originally posted by spadoosh
    China (and the emerging markets) now consume commoditites.

    Financial power base is moving West to East.

    China can now pick and choose what it produces, and at what price.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • grey gym sock
    • By grey gym sock 15th May 18, 11:10 PM
    • 4,323 Posts
    • 3,847 Thanks
    grey gym sock
    Also, another theoretical question which I've been wondering about: whats stopping me from putting my money into a Vietnamese savings account and taking advantage of their 6.25% official interest rate?
    Originally posted by george4064
    this has been answered well.

    but think what lord flashheart might say: 6.25%, ding dong!!
    • Malthusian
    • By Malthusian 16th May 18, 9:12 AM
    • 4,065 Posts
    • 6,371 Thanks
    Malthusian
    I thought it might be something to do with FX movements and inflation, however (easier said than done) couldn't someone just put a load of money into Dong and Vietnamese banks and hedge back the exposure?
    Originally posted by george4064

    The cost of hedging would eliminate the interest rate differential. So you may as well just put your money in UK banks. Hedging is the financial equivalent of mindfulness - it is like doing nothing, only more expensive.
    • aj23
    • By aj23 16th May 18, 10:25 AM
    • 396 Posts
    • 145 Thanks
    aj23
    I'm a 90s kid too but I remember getting £150-£200 a year on a balance of £2000-3000 in a bog standard saving account with Abbey National aka Abbey aka Santander
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