Based on what?
I've been seeing it happen with friends and family members and even I have not being putting my cash in the bank because I'm insured so without a reward there's no reason to be rushing to deposit cash in the bank.
TSB - Interest Rates on Plus Account now at 0%
- Thread starter Liquid_Entity
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Based on what?
I've been seeing it happen with friends and family members and even I have not being putting my cash in the bank because I'm insured so without a reward there's no reason to be rushing to deposit cash in the bank.
Soldato
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Now I'm a carer all I do is sit and watch my savings shrink. But when I was still working (and when I eventually work again) my response to lowered interest rates was to pay myself interest.
Sounds stupid, but psychologically you have to try and spin it positively. If you don't want risk (shares or whatever) and don't want to watch inflation destroy your savings, you have to spend less and save more to compensate. Fortunately paying yourself 2-3% interest rates isn't that hard unless you have a good chunk tucked away for a house deposit.
Sounds stupid, but psychologically you have to try and spin it positively. If you don't want risk (shares or whatever) and don't want to watch inflation destroy your savings, you have to spend less and save more to compensate. Fortunately paying yourself 2-3% interest rates isn't that hard unless you have a good chunk tucked away for a house deposit.
Given that there is a limit as to how much you can put in ISAs each year, doesn't it make sense to still put money in there (however small the interest) so that when rates increase you've got more capital?
Depends on your tax status really and your amount of savings.
Before the plunge in interest rates there was really no benefit of an ISA for basic rate taxpayers because the banks paid less interest on ISA's, when I was in uni I was putting my student loan and interest free overdrafts into fixed term savings accounts paying 7% interest whereas ISA's were only offering 5.x%
Plus now you have the first £1000 of interest tax free so you need to have 5 figures in savings before you pay any tax anyway.
True. I guess for the people that don't get that £1k free it makes more sense, but I still don't see why you wouldn't pop it into an easy access ISA, ensuring you're maximising the annual limit.
Soldato
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The kids ns and I ISA just dropped massively too, from 3.25 to 1.5. not sure why sure a large change, is the economy that screwed? Normally you'd see a quarter of a percent at a time.
I read that the Treasury gives NS&I a target for how much money to raise (saving with NS&I is basically lending money to the government). The accounts have become so popular that the target has been reached - hence they are cutting rates.
Soldato
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Dam, probably still the best rate anyway
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And I was disappointed that my savings account interest rate was being cut from 1.05% to 0.7%! (Marcus)
I was going to switch but expect banks with higher interest rates to also drop their rates in the near future.
This is what I am doing. Never cared about interest rates on savings, use my savings to pay off my mortgage.
Yeah even on low mortgage rates its still financially better now. I shall remove mine altogether very soon.
Versus regular saving yeah, but versus investments in a S&S ISA it's a bit closer.
There is major downside risk with an S&S ISA, even with Life Strat 80/20. I’m not saying it wont come good, but it might not. Has passive investing survived a previous pandemic such as the current one? I do agree that over a long enough time frame the markets go up, but it might be 5 years, might be 50, in which case it’ll likely only be good for your children.
That's what will drive the economy again, but most people will see it as counter-intuitive especially at a time where job losses are risky / unemployment are high etc.
I can't see the banks passive on costs to savers that have small amounts of savings as they're easy to move. If anything they'll look at targeting those with much larger balances as those will be much harder to move elsewhere.
Completely agree with this. Think about it this way: if you were mortgage-free, would you borrow against your house to go and bet on the stock markets? I doubt it!
Of course, it’s different for everyone depending on your circumstances. If you have plenty of spare cash to overpay your mortgage then it may well make sense to add some exposure to the markets instead since you have the capacity to absorb the downside risk. But if you are just about managing then first repaying your debts is normally the best bet - you can think of it as a tax free risk free investment!
Over the long term I would yes - people do similar things with Pensions (i.e. overpay into their pension once the mortgage is paid off). A Pension and a S&S ISA invested in the right funds aren't so different.