Mar 09

Fight for your right to good savings rates

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I find it amazing that British savers don’t make more fuss about the fact that banks and building societies give such poor interest on investment (roughly 2-3+ per cent depending on the deal), so that in some cases the return is actually less than inflation (around 3.6 per cent pa). Of course the situation is that much more serious for pensioners.  It no longer makes sense in many cases to put a lump sum on retirement into an annuity. How crazy is that?

We all know the Bank of England  has set its interest rate at half a per cent so saver providers pay minimal interest too, but the politicians and financial industry never have a word to say for  savers and pensioners who have seen their income slashed for four years, having become reliant on reasonable returns for decades.

The British tend not to grumble, indeed we say “mustn’t grumble”.  But why not? Politicians respond to criticism and who knows, the providers could be shamed into offering a bit more.  Some grumbling makes you aware and encourages the more pro-active to do something about it. A simple way to fight back for yourself is to chase good interest rates.

Although an effort, it’s worthwhile to seek the best rates, you could gain an extra half to one per cent, or more, on your money.  Awareness and regular checking (every three months) in newspapers, online and in the high street reaps small, and over time, important rewards.  Some savers treat it like a hobby so don’t resent a bit of extra form filling.

First off, if you know one of the two million British homes which still have a below minimum internet connection speed – encourage them to sort it. The internet is a real aid to successful money management and everyone has to work harder at that.

A reason to get good broadband is that you can compare quickly a range of savings products. Head for the comparison sites online and if you find your investment of a year ago is looking heart-sinkingly uncompetitive, you can often just transfer your funds online to another provider offering higher interest.

Don’t forget to look at the ISA products. It always makes sense to use up all of your annual cash ISA allocation (£5,640 April 2012-2013) first, because the interest is tax free.

If you are unused to the internet, ask a savvy friend to go over the savings product with you, to be sure you have understood the deal before commitment.

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