Fixed Savings Accounts Holders Facing A Precipice

Fixed Savings Accounts Holders Facing A Precipice

By:


Rates on fixed savings accounts are declining, it has been found.

Britons holding savings accounts with long-term figures of return are set to encounter difficulties later on this year, new research has suggested.

According to a study published by HSBC earlier this week (June 18th), people with cash invested in the likes of fixed rate bonds for longer periods - such as three or five years - are facing a "savings precipice" in 2011.

This is because rates for these products remain low, despite factors like high inflation, meaning that they will earn little when they come to reinvest their money.

The fact that the Bank of England has held interest rates at 0.5 per cent for the lat 27 months in succession is having a negative impact on the returns offered by savings products like bonds, while banks and building societies are generally more reluctant to lend in the wake of the global economic downturn.

HSBC's study established that there are currently more than 4.7 million active fixed rate savings accounts in the UK, which contain a sum of 92 billion ready for maturity in the coming months.

October represents the most common month for maturity - with more than 534,000 packages doing so in this timeframe - but the survey showed that investors with cash in the two million deals that have matured so far in 2011 will lose 242 million should they decide to simply restore funds into similar products.

David Wells, head of pensions, savings and investments at HSBC, commented that many people opt for fixed rate packages as they give a "guaranteed income and security".

However, he added: "We urge people to seek advice and consider all their options before simply reinvesting their savings in a similar product."

This may particularly affect females as Martin Bamford, chartered financial planner at Informed Choice, recently noted that women are up to speed with the need to save for retirement than men.

Meanwhile, there is a growing knowledge among Britons about how they can make their current account balance stretch far enough to cover their living costs.

That is according to Jasmine Birtles, founder of online resource Money Magpie, who believes people are now much more aware of their income and expenditure than they were this time last year.

Ms Birtles explained that individuals are determined to have "more control" over their monetary situation as the squeeze continues on household finances, meaning they are sticking to a budget as opposed to resorting to borrowing options like credit cards or personal loans.

"People are sort of moving away from credit, which doesn't really tell you how much money you've spent for months," she stated.

These comments came after the publication of research from the British Retail Consortium earlier this week (June 29th), which revealed that the average small transaction on a credit card in the UK is now 6.63.

About the Author:
UK Price Comparison website Which4U - Compare Credit Cards, ISAs, Bank Accounts, Bonds, Savings Account, Mortgages, Insurance, TV & Broadband and Gas/Electric bills to find the best UK deals



Article Originally Published On: http://www.articlesnatch.com


Tags: , ,

|

Loading...
Related....
Videos...

Recent Personal-Finance Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.