In the current economic climate, it is necessary for people to avoid placing unnecessary pressure on their finances.
It is claimed by the Post Office as a result of recently released a survey that consumers are missing out on billions of pounds by placing money into ineffective savings schemes. And during a time of high food prices and inflation, on top of reduced access to credit, it was claimed that it is more vital than ever to select attractive deals. Findings from the company identified that by placing cash into accounts which offer interest rates lower than the Bank of England’s base rate, savers may well be missing out on about 8 billion pounds every year.
Overall, 30 per cent of people appear to be unsure as to the rate of interest their savings account earns, with an additional 39 per cent reporting to have no idea if their supplier has changed interest rates on such financial products over recent months. However, people living in the north-east were indicated as having the least understanding about the rate of interest they receive on their account. Here, some 37 per cent claimed they had no idea what the amount of interest gained on their saving schemes was. On the other hand, a little more than a fifth (22 per cent) of consumers from the east Midlands were indicated as being unaware of the interest rate that their savings account earns.
On top of saving money inefficiently, it is quite plausible that consumers discover that their financial circumstances in later life is not as strong as they once thought it would be. This may mean they struggle to meet financial demands such as loan repayments, the cost of property repairs or bills more expensive than previously thought they would be when they are older.
Richard Norman, director of savings at the Post Office, commented: “It’s time savers started to take care of their savings by choosing a home for them wisely - especially in the current economic downturn. There are hundreds of poor-paying accounts, so people need to avoid them. If you don’t know what interest you are currently earning, contact your provider. If it is paying a low rate and you want it to earn more then move it. Although it might be tough to put money away at the moment, it is more important than ever to make sure your existing savings work as hard as they can for you.”
He also said that those people who are looking to open up a new account should take the time to check how much interest they will earn on their savings and if they will be able to access their money without penalty.
For those people who seem to be worried about their ability to put money away for the future, taking out a debt consolidation loan could be recommended. By opting for this kind of loan it is possible that borrowers will be able to merge numerous constraints on their spending into one low cost monthly repayment. In turn this could leave them with an increase in disposable income, cash which could then be invested into a savings scheme.
Last month research by Birmingham Midshires shown that 77 per cent of People saved some money over the preceding three months. The typical amount invested was shown to stand at 938 pounds, going up from the 910 pounds recorded in May 2007.