Saving rates are low but we still need to save more

As incentives go, current interest rates don’t exactly have much in the way of motivation to offer. Even after years of putting cash aside you’re not likely to be able to grow your savings pot with a current Bank of England base rate of just 0.25%. Perhaps unsurprisingly then, the Office for National Statistics (ONS) recently revealed the savings ratio in the UK had fallen to a record low. The savings ratio is the proportion of disposable income in the UK that is channelled into savings. In May this year the ratio was down to 1.7%, from 3.3% in the previous quarter so for each £100 of disposable income we are saving on average just £1.70. Millions of people have virtually no savings at all. Why is the savings ratio so low? A number of reasons have been put forward to explain why Brits are no longer channelling money into their savings accounts. The first of these is that there is very little incentive to do so with savings rates so very low. The second is more unnerving – that
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Where to save your money with interest rates so low

It continues to be hard going for Britain’s savers. With interest rates continuing at record lows, returns on savings are negligible or worse for the clear majority. One of the main areas affected by low interest rates is that of cash Isas where the average rate paid is just 0.99% with the possibility that this could go even lower as Britain starts to negotiate its withdrawal from the European Union with many economists predicting an economic slowdown. It may be hard to believe that the rates paid on Isas could drop further – particularly when you consider that NatWest only pays 0.01% on its Isa – but the likelihood is that they will. So, where should savers wishing to get a half decent return on their investments put their money. Here, we look at the alternatives to cash Isas where the tax saving benefit seems to have become negligible: Interest-bearing current accounts Bizarre as it may seem, many of the current accounts available on the high street and online now pay much hi
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How are business rates changing and will it affect you?

Tens of thousands of smaller businesses are likely to be hit by higher business rates following the revaluation of the rateable values of their premises. The change – which has sparked howls of protest among business organisations – is likely to see much higher business rates for those based in parts of the South East and London where property prices have risen strongly in recent years. On the flip side, businesses based in other parts of the country where property price rises have not kept pace with those in London are likely to see cuts in business rates. What are business rates and how are they calculated? Every business – apart from those which operate from so-called ‘home offices’ – have to pay business rates on the premises that they use including shops, warehouses and factories. The rate that a business pays is worked out according to the value of the premises as well as the value of any equipment that a business uses there plus the economic sector the business ope
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What will happen to interest rates in 2017

Interest rates have been stuck at record lows for the best part of seven years and there is little prospect that this situation is going to change any time soon. The Bank of England’s bank rate is currently at 0.25 per cent the lowest it has been at in modern times. It cut the rate from 0.5 per cent in the aftermath of the Brexit vote in June when it was widely anticipated that the British economy would fall into recession. But that didn’t happen with growth particularly in the service sector – holding up. The Bank’s governor, Mark Carney, indicated in July that rates were likely to be cut further but that is now looking less likely with rising import costs putting pressure on inflation. Interest rates to rise? Yet despite the fall in the value of sterling since the referendum, Mr Carney has said that it is unlikely that it will be raising rates. He said in October: We re willing to tolerate a bit of an overshoot in inflation over the course of the next few years in order…
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When interest rates are low does it make sense to save?

These are lean times if you are a saver with interest rates at historically low levels after the financial crisis. And in the wake of the UK’s vote to leave the EU the Bank of England has cut its base rate to just 0.25 per cent it can t really go much lower. While borrowers are enjoying an unparalleled run of low repayment rates, savers are paying the price for this. Rates on savings accounts in the UK are as low as 0.01 per cent.  If you ve got £10,000 to invest and put it into an account yielding 0.01 per cent, then after a year you would have earned just £1 in interest. The highest rates on offer are currently around 4 per cent but these represent a tiny proportion of the market. The average interest rate in the UK on savings account is currently just a shade over 1 per cent. This level of interest doesn t even cover inflation (RPI) which is currently running at 1.5%. The basics of saving If you ve got money tucked away already, then the first thing that you should do is to ch
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With low rates should I make mortgage overpayments?

Just when we thought interest rates couldn t get any lower, the Bank of England moved to mitigate any potential fallout from Britain’s decision to leave the European Union by cutting them further to 0.25 per cent. Bad news for savers but very definitely good news for the country’s borrowers, particularly those on variable rate or tracker mortgages. Making mortgage overpayments is an option worth considering. But is it a good idea to take advantage of these record low rates? Here are some things to consider: Do you have debts charging higher interest rates? Your mortgage is likely to come with the lowest interest rate of all of your debts. That’s because it is repaid over 25 years – sometimes longer – and the total amount you will repay is large. It’s also secured against your house meaning that the lender has more confidence that it will be repaid. You’re likely to have loans and credit cards charging much higher rates of interest so it always makes more sense to pay off
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