08:49 15 December 2013
Low savings rates have characterised the market place as a result of competition in the financial sector. If you critically examine the rates for savings accounts nowadays, you will find that they have plummeted dramatically. The Financial Conduct Authority (FCA) has attributed this to the intense competition experienced in the finance sector.
Because of the very low rates, 4 out of 5 adults have their savings stashed somewhere inadvertently piquing the attention of the FCA.
Teaser rates have been used to gain the attention of the very many savers in the market today. These rates will lure them in and once they get in, the rates disappear and they are left with very low rates. Since the customers have already committed themselves to the bank, they will not move. Banks are not pressured in any way to provide their customers with the best deals.
Most people want to make their money do a lot for them but these low saving rates are deterring people from joining banks.
Going low and having access to your money
It is unfortunate the most banks offering high rates of returns will lock away your money for a really long time. Leeds offers a rate of 3% but only if you are willing to put your money away for 5 years. When compared to Santander’s Easy ISA, which offers 0.1%, the Leeds alternative looks very attractive.
Banks do not feel the urgency of attracting customer deposits by highlighting attractive savings rates as the Funding for Lending Scheme (FLS) is already in play. And with the base rate expected to hover around at about 0.5%, the savings rate are not going to improve any sooner. It is predicted that rates will continue to plunge or removed entirely. Therefore, it is recommended by most financial pundits to get the best buy rates as early as possible to safeguard your savings.