The distinct lack of financial education and 15 years of artificially low interest rates has created apathy among a new generation of savers, as noted by Editor John Woods in the current issue of the INTEREST journal.
The current generation of potential savers haven’t yet fully realised how good a return they can now get on their savings.
We can now get an easy access variable rate of 4.67%. You were hard pushed to get anything like that even before 2008. Why aren’t they flying off the shelves?
The answer seems to be that the people who have now got money have no experience of what to do with it. Where to save it? What account? What building society or bank? Has it still got a local branch? Should we have an IFA? What’s the tax position? Is it just easier to leave it where it is?
Historically, people with savings expected to get a reasonable interest rate from their building society. However, for 15 years we had artificially low rates of interest as a result of quantitative easing.
Between 2008 and 2022 savings paid virtually nil (0.1%) interest. It wasn’t worth trying to change to better accounts. There weren’t any. So, pensioners either started dipping into their savings or cut back on spending.
Is it time the providers, their trade bodies and the personal finance press started a concerted campaign to re-educate their customers and readers.
Read more in the latest issue of the INTEREST journal, which you can read for free here.
