Savers facing accounts with no interest

01-04-2009, 01:49 AM

Millions of savers are braced for zero per cent accounts within days as the Bank of England is poised to cut interest rates to the lowest level in its 315-year history

Experts have warned the return on savings could plumb new depths with the Bank expected to take unprecedented steps to regain control over the economy.

They widely believe the Bank will reduce borrowing costs to below their 2 per cent level - and possibly all the way down to 1 per cent - in its first meeting of the year next week.

More than 7 million people have saving accounts which already pay interest of 1 per cent or less. If a cut is passed on in full by banks, these accounts will dive towards negative territory for the first time on record.

Many elderly people who rely on the income from savings have found themselves struggling in recent months as returns fall.

Just 18 months ago average interest rates on savings accounts were as high as 6 per cent. But consecutive cuts by the Bank's Monetary Policy Committee have led to banks slashing their savings rates, with the current average rate being just 2 per cent.

The Daily Telegraph has launched a campaign aimed at giving pensioners a tax cut on the income earned from their savings and investments to help them during the recession.

Mark Dampier, of asset managers Hargreaves Lansdown, said: "It is a dire times for savers, especially for elderly people who rely on their income. They have already seen a sharp drop in excess of 50 per cent and can anyone tell me of someone in the public or private who would put up with a 50 per cent pay cut?"

A cut in interest rates raises the bizarre possibility that some savers may soon end up having to pay banks to keep money with them.

Kevin Mountford, head of savings at Moneysupermarket.com, said: "A large number of savings accounts only pay 1 per cent and so a wave of savers will end up receiving no interest at all if rates are cut significantly again - and may, in theory, end up paying banks for having being prudent savers.

"All round it is bad news for savers."

Calls for a rate cut were strengthened by evidence that Gordon Brown's £300 billion banking bail-out has failed to make it easier for households to borrow money. The credit crunch is instead set to worsen in the months ahead and lenders intend to make it even more difficult for customers to borrow, according to a new report from the Bank.

They intend to continue passing on only a fraction of the Bank's rate cuts and increasing the stringency of their loan conditions as they seek to repair their own balance sheets.

New figures showed that house prices have fallen by a record 18.9 per cent in the last year. The average house is now worth what it was in August 2004, according to Halifax.

Amid the deepening economic crisis, experts warned that while borrowing costs look certain to remain high, savings rates, which have already fallen fast, are set to dip to the lowest levels on record as soon as next week.

Economist Howard Archer, of Global Insight said: "It seems a stone dead certainty that the Bank of England will deliver another hefty interest rate cut next Thursday."

If they do, it will take interest rates to the lowest level since the Bank was founded in 1694.

The forecasts come after Nationwide announced that it is reducing the interest rates across its savings and banking accounts by an average of 0.87 per cent following the Bank of England's decision to cut rates by one percentage points in December.

The cuts mean some of its savings accounts pay as little as 0.5 per cent gross, such as its e-savings plus account if customers make more than three withdrawals in a year. The building society is also refusing to pass on any further interest rate cuts to its customers with tracker mortgages.

The Bank of England indicated that there would be further examples of this in the coming months.

Its Credit Conditions survey underlined the growing realisation that the banking bail-out package unveiled by Gordon Brown in October has failed. Although the bail-out has ensured the survival of the major banks it has not fulfilled its other promise: to increase the availability of credit to families.

It raises the prospect that the Government will be forced in the coming months to pump another multi-billion pound sum into the British banking sector - perhaps going as far as to wholly nationalise some of the biggest lenders.

Analysts believe there may be no alternative if the Government truly intends to increase the availability of mortgages to British consumers.

David Cameron urged Gordon Brown to admit that his bank recapitalisation plan has failed and more needs to be done to get banks lending to businesses.

The Conservative leader said: "Instead of Gordon Brown striding round the world lecturing everyone about the brilliance of his bank recapitalisation plan he has to recognise that it hasn't worked.

"The banks are now traumatised and trying to rebuild their credit – the government needs to react to move banks out of that position – small businesses shouldn't be going bust and they are because the are not getting the money they need."

He said it was vital that the Government brought in a national loan guarantee scheme. The Telegraph revealed last month that ministers are working on a scheme which will see the Government guarantee part of new loans that banks agree with businesses.

A Treasury spokesman said: "The Government is continuing to closely monitor commitments made by banks, through (the) new lending panel, and will continue to take whatever action is necessary to ensure the availability of new lending.

"Recent actions by many of the major banks to increase the availability of lending in 2009 are welcome but clearly we need to see more.

"As the Chancellor has said, he is prepared to look at further measures to make it more likely that banks will lend, but banks have to understand that with billions of pounds of taxpayers' money invested, or being made available as a guarantee, the public and businesses are looking for something in return."

http://www.telegraph.co.uk/finance/p...-interest.html

Dantheman62 · 01-04-2009, 01:56 AM

Doesn't surprise me, I think this picture goes here,....

Carol · 01-04-2009, 01:58 AM

With this type of bull*hit going on I think everyone is better off taking their money out of the banks, wrap it in tin foil and stick it in their freezers in a plastic jar!

Humble Janitor · 01-04-2009, 02:00 AM

I usually don't keep a lot in the bank at once. I think that's a safe thing that anyone with half a brain should be doing.

She-Ra · 01-04-2009, 03:16 AM

Barclays will be changing their savings accounts rates later this month or Feb.

I agree with the above posters, there's no point in keeping any more than you need for bills, rent and essentials that you need to pay for via debit card in the bank.

Stargazer1965 · 01-04-2009, 06:03 AM

Quote:

Originally Posted by Carol

With this type of bull*hit going on I think everyone is better off taking their money out of the banks, wrap it in tin foil and stick it in their freezers in a plastic jar!

I'm from KY...I'm thinking a mason jar buried out back.....

01-04-2009, 06:45 AM

Quote:

Originally Posted by Stargazer1965

I'm from KY...I'm thinking a mason jar buried out back.....

gold/silver. Paper doesn't do well

Swanny · 01-04-2009, 08:03 PM

Quote:

Originally Posted by Carol

With this type of bull*hit going on I think everyone is better off taking their money out of the banks, wrap it in tin foil and stick it in their freezers in a plastic jar!

Sounds like a good idea except that I don't have any money, my fridge freezer has packed up, my washing machine has bearings that sound as if they are going to explode any minute and today I managed to drive my van into a post and have caused loads of damage so will be losing my no claims

Funnily enough while I was talking to a friend today about fridges he said "Watch out bad luck comes in threes."

Oh well at least I don't have to worry about the van being ok for work tomorrow as I don't have any of that either

Not a great start to the year for me, hoping things will turn around soon

Dantheman62 · 01-04-2009, 08:35 PM

geez Swanny, if ya didn't have bad luck, you'd have no luck at all!, I feel for ya, any mechanical damage to the van?

Swanny · 01-04-2009, 09:04 PM

Thx mate

It has damaged the passenger door the sliding side door and the sill.
My mate is a sprayer and he reckons it will need pulling out and both doors replacing

Don't know why but nearly every year at the end or beginning I have bad luck, if anyone's going to die that's when they do it.
But I also have good things happen to me at this time of year, the rest of the year is usually pretty tame in comparison

Good news is I will be meeting my girl for the first time in a couple of weeks

01-04-2009, 01:49 AM	#1
Baggywrinkle Guest Posts: n/a	Savers facing accounts with no interest Millions of savers are braced for zero per cent accounts within days as the Bank of England is poised to cut interest rates to the lowest level in its 315-year history Experts have warned the return on savings could plumb new depths with the Bank expected to take unprecedented steps to regain control over the economy. They widely believe the Bank will reduce borrowing costs to below their 2 per cent level - and possibly all the way down to 1 per cent - in its first meeting of the year next week. More than 7 million people have saving accounts which already pay interest of 1 per cent or less. If a cut is passed on in full by banks, these accounts will dive towards negative territory for the first time on record. Many elderly people who rely on the income from savings have found themselves struggling in recent months as returns fall. Just 18 months ago average interest rates on savings accounts were as high as 6 per cent. But consecutive cuts by the Bank's Monetary Policy Committee have led to banks slashing their savings rates, with the current average rate being just 2 per cent. The Daily Telegraph has launched a campaign aimed at giving pensioners a tax cut on the income earned from their savings and investments to help them during the recession. Mark Dampier, of asset managers Hargreaves Lansdown, said: "It is a dire times for savers, especially for elderly people who rely on their income. They have already seen a sharp drop in excess of 50 per cent and can anyone tell me of someone in the public or private who would put up with a 50 per cent pay cut?" A cut in interest rates raises the bizarre possibility that some savers may soon end up having to pay banks to keep money with them. Kevin Mountford, head of savings at Moneysupermarket.com, said: "A large number of savings accounts only pay 1 per cent and so a wave of savers will end up receiving no interest at all if rates are cut significantly again - and may, in theory, end up paying banks for having being prudent savers. "All round it is bad news for savers." Calls for a rate cut were strengthened by evidence that Gordon Brown's £300 billion banking bail-out has failed to make it easier for households to borrow money. The credit crunch is instead set to worsen in the months ahead and lenders intend to make it even more difficult for customers to borrow, according to a new report from the Bank. They intend to continue passing on only a fraction of the Bank's rate cuts and increasing the stringency of their loan conditions as they seek to repair their own balance sheets. New figures showed that house prices have fallen by a record 18.9 per cent in the last year. The average house is now worth what it was in August 2004, according to Halifax. Amid the deepening economic crisis, experts warned that while borrowing costs look certain to remain high, savings rates, which have already fallen fast, are set to dip to the lowest levels on record as soon as next week. Economist Howard Archer, of Global Insight said: "It seems a stone dead certainty that the Bank of England will deliver another hefty interest rate cut next Thursday." If they do, it will take interest rates to the lowest level since the Bank was founded in 1694. The forecasts come after Nationwide announced that it is reducing the interest rates across its savings and banking accounts by an average of 0.87 per cent following the Bank of England's decision to cut rates by one percentage points in December. The cuts mean some of its savings accounts pay as little as 0.5 per cent gross, such as its e-savings plus account if customers make more than three withdrawals in a year. The building society is also refusing to pass on any further interest rate cuts to its customers with tracker mortgages. The Bank of England indicated that there would be further examples of this in the coming months. Its Credit Conditions survey underlined the growing realisation that the banking bail-out package unveiled by Gordon Brown in October has failed. Although the bail-out has ensured the survival of the major banks it has not fulfilled its other promise: to increase the availability of credit to families. It raises the prospect that the Government will be forced in the coming months to pump another multi-billion pound sum into the British banking sector - perhaps going as far as to wholly nationalise some of the biggest lenders. Analysts believe there may be no alternative if the Government truly intends to increase the availability of mortgages to British consumers. David Cameron urged Gordon Brown to admit that his bank recapitalisation plan has failed and more needs to be done to get banks lending to businesses. The Conservative leader said: "Instead of Gordon Brown striding round the world lecturing everyone about the brilliance of his bank recapitalisation plan he has to recognise that it hasn't worked. "The banks are now traumatised and trying to rebuild their credit – the government needs to react to move banks out of that position – small businesses shouldn't be going bust and they are because the are not getting the money they need." He said it was vital that the Government brought in a national loan guarantee scheme. The Telegraph revealed last month that ministers are working on a scheme which will see the Government guarantee part of new loans that banks agree with businesses. A Treasury spokesman said: "The Government is continuing to closely monitor commitments made by banks, through (the) new lending panel, and will continue to take whatever action is necessary to ensure the availability of new lending. "Recent actions by many of the major banks to increase the availability of lending in 2009 are welcome but clearly we need to see more. "As the Chancellor has said, he is prepared to look at further measures to make it more likely that banks will lend, but banks have to understand that with billions of pounds of taxpayers' money invested, or being made available as a guarantee, the public and businesses are looking for something in return." http://www.telegraph.co.uk/finance/p...-interest.html

01-04-2009, 01:56 AM	#2
Dantheman62 Avalon Senior Member Join Date: Sep 2008 Location: So. Cal. U.S. Posts: 4,205	Re: Savers facing accounts with no interest Doesn't surprise me, I think this picture goes here,....

01-04-2009, 01:58 AM	#3
Carol Project Avalon Hero Join Date: Sep 2008 Location: Big Island, Hawaii Posts: 2,008	Re: Savers facing accounts with no interest With this type of bullhit going on I think everyone is better off taking their money out of the banks, wrap it in tin foil and stick it in their freezers in a plastic jar! __________________ Aloha, thank you, do jeh, toda, arigato, merci, grazie, salamat po, gracias, tack, sukria, danke schoen, kiitos, dank u, mahalo nui loa* Images to nourish the spirit: http://mistsofavalon.invisionplus.ne...&showtopic=198

01-04-2009, 02:00 AM	#4
Humble Janitor Avalon Senior Member Join Date: Sep 2008 Posts: 3,201	Re: Savers facing accounts with no interest I usually don't keep a lot in the bank at once. I think that's a safe thing that anyone with half a brain should be doing.

01-04-2009, 03:16 AM	#5
She-Ra Avalon Senior Member Join Date: Sep 2008 Location: London, UK Posts: 159	Re: Savers facing accounts with no interest Barclays will be changing their savings accounts rates later this month or Feb. I agree with the above posters, there's no point in keeping any more than you need for bills, rent and essentials that you need to pay for via debit card in the bank.

01-04-2009, 08:35 PM	#9
Dantheman62 Avalon Senior Member Join Date: Sep 2008 Location: So. Cal. U.S. Posts: 4,205	Re: Savers facing accounts with no interest geez Swanny, if ya didn't have bad luck, you'd have no luck at all!, I feel for ya, any mechanical damage to the van?

01-04-2009, 09:04 PM	#10
Swanny I dont need a label ! Join Date: Sep 2008 Location: The Shire of Wilt Posts: 2,889	Re: Savers facing accounts with no interest Thx mate It has damaged the passenger door the sliding side door and the sill. My mate is a sprayer and he reckons it will need pulling out and both doors replacing Don't know why but nearly every year at the end or beginning I have bad luck, if anyone's going to die that's when they do it. But I also have good things happen to me at this time of year, the rest of the year is usually pretty tame in comparison Good news is I will be meeting my girl for the first time in a couple of weeks