Published On: Thu, Oct 29th, 2020

Interest rates: Britons lose out on millions through savings accounts this year | Personal Finance | Finance

Britons have been affected in droves by the ongoing financial crisis, however many have used the lockdown period to increase their savings goals. Some 73 percent of individuals used lockdown as their chance to put more money aside due to a lack of spending. This arose from a number of reasons, including no longer having to commute, making lunch at home, and staying home more. 

But a report from Atom Bank also showed many Britons are ultimately missing out despite bumper levels of saving. 

Half of savers asked said they are putting their spare cash into an instant savings account to access this money when they need to.

Indeed, for many, this may be a sensible decision, given the changing financial circumstances of individuals.

However, despite active savings choices, Britons are missing out on millions, the report said, due to poor savings returns.

READ MORE: Retirement: How Britons can secure a mortgage in later life

In recent weeks, a number of central bank policymakers have expressed support for negative interest rates as a measure which could potentially boost the economy.

However, BoE governor Andrew Bailey has insisted the measure is merely “in the toolbox” with no imminent plans for its use. 

Mark Mullen, CEO of Atom Bank, commented on the situation being faced by many Britons.

He said: “Banks have been taking customers for granted for years. Lockdown has simply brought this into sharper focus.

“Brits have saved millions with little return for their efforts, while some of the UK’s biggest banks even pressed ahead with upping overdraft rates to an absurd 40 percent flat fee.

“For too long, it’s been the norm to offer customers shockingly low interest rates. 

“People are even stockpiling cash in their homes, rather than in a bank account, which shows just how little they think they’ll gain by trusting the big six with their money.

“The borrower should get a great deal from the bank – whether to buy their home or sustain and grow their business – but so should the saver.

“It’s time to shine a light on the behaviour of big banks and to do the right thing by our customers.”

Despite a poor return on savings, which may understandably dissuade savers from putting money away, a bank or building society remains the key place to safeguard funds.

This is because the Financial Service Compensation Scheme (FSCS) insures funds up to £85,000 should the worst happen.

But the limit is applicable per financial institution, so Britons should check if they have multiple accounts with the same banking group. 

For those who do wish to continue to grow their savings, looking around for the best rates is key.

This may involve abandoning bank loyalty to search for the best option to suit a person’s circumstances.

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