Tuesday, February 12, 2008

Which Bank is Most Cash Desperate

Savers 'escape' recent rate cuts

The Alliance and Leicester are currently advertising 12% for a year on TV to entice new regular deposits which beats all the figures in this BBC article. After years of stingy saving rates this is all starting to sound a little desperate.

Posted by enuii @ 08:20 PM (879 views)
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7 thoughts on “Which Bank is Most Cash Desperate

  • stillthinking says:

    The banks have perpetuated the myth that lending is from deposits by matching the interest paid on deposits to interest charged on loans i.e. deposit interest is about 5-6% but the interest charged on a loan is about 7%.
    All reasonable and good. They need to write off bad loans and cover operating costs. Seems reasonable etc. Nobody including myself questioned this.
    But, as I am now unhappily aware, in fact given that 100 pounds they then lend out a 1000 (or more, whatever it is).
    So they are making a -huge- amount of interest from that deposit, only a tiny amount of which is returned to the saver.
    I think the internet has changed all this personally. For a long time I have thought that the real distinction in the classes in the UK is simply between the families in the know, and those who aren’t about the underlying realities of the financial system.
    This whole thing is only acceptable if the value of money is stable. Now it isn’t. I worry that the UK is going to go down big time, I don’t just mean that house prices crash. What is going to happen about the pensioners? Already a third of council taxes are for unfunded public worker pensions. A third!!! We aren’t even dealing with the mass of pensioners yet. All of the government debt is going to come home to roost, taxes are already too high so what is to be done? The government have shown that they will willingly countenance a much larger disaster as long as they gain some time for the delay.
    Everything you read if (admittedly if you search the internet for doom and gloom scenarios ) is bad.
    Time will tell I suppose. The sheer stupidity of government is what has saved them, because really its not believable. The government is like the most stupid person in the office, but because they are on tv in a suit they acquire a glean of respectability. There is none. We have all gone to the dentist and realised that the guy obviously was bottom in the class dentist wise and thats the government we have.
    I have to work with people in the public sector and believe you me, they are the most useless money wasting work shy swine in the world, and it makes me sick to deal with them. Too much? Not really. I am embarassed when I go into a cafe and buy a 5 pound meal because the people working in that cafe work hard for little money. In the government its 500 a day for nothing. One UK citizens whole month of tax goes to some do nothing git for a day. What a tragic shame.

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  • It doesn’t quite work like that.

    Customer deposits £100. They lend out £99. The borrower spends the money, and it gets paid back into the bank. The bank lends out £98 from it and the cycle goes on.

    That’s how you end up with £1000 or whatever out of an initial £100 deposit.

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  • I’m sure if you look into the fine print of their offer you will find there is a maximum amount you can save each month, and therefore you can only save a small amount at the 12% interest rate; this is just a ploy to get people to open accounts with them; first direct are more honest, they you a cash amount to open an account with them.

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  • I’m sure if you look into the fine print of their offer you will find there is a maximum amount you can save each month, and therefore you can only save a small amount at the 12% interest rate; this is just a ploy to get people to open accounts with them; first direct are more honest, they you a cash amount to open an account with them.

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  • Landofconfusion says:

    > 1. stillthinking said…
    >
    > But, as I am now unhappily aware, in fact given that 100 pounds they then lend out a 1000 (or more, whatever it is).

    IMHO at some point this financial system is going to hell and us along with it. See:

    http://video.google.com/videoplay?docid=-9050474362583451279

    for an explanation.

    > So they are making a -huge- amount of interest from that deposit, only a tiny amount of which is returned to the saver.

    Unless you invest in something like this:

    http://uk.zopa.com/ZopaWeb/

    > For a long time I have thought that the real distinction in the classes in the UK is simply between the families in the know, and those who aren’t about the underlying realities of the
    > financial system.

    In my experience, some people work hard, get good jobs and VALUE MONEY. Others just rent and vote Labour (if they vote at all).

    > All of the government debt is going to come home to roost, taxes are already too high so what is to be done?

    They will leave power, the Tories will come in and be left will no other option than to cut services and raise interest rates. Don’t forget that council tax is currently capped and the government has already announced further cuts to it’s funding of local councils.

    > The government have shown that they will willingly countenance a much larger disaster as long as they gain some time for the delay.

    What most BTL’ers don’t seem to recognise is that 2005 SHOULD of been a crash year. It wasn’t because someone across the pond cut interest rates to ‘protect the economy’, therefore causing debt to become cheaper and HP to rise.

    > The sheer stupidity of government is what has saved them

    I don’t agree. Greed has saved them but at a high cost to us all, something which most people are only just beginning to realise.

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  • I had an email from Egg yesterday, to tell me about a change in the interest rate for my savings account (not that I have any money in it – better rates elsewhere right now!).

    They open by saying that “as you are no doubt aware” the BoE has recently dropped their rate from 5.5% to 5.25%. Then then go on to say that in light of this, they have dropped their savings rate from 5.5% down to 5.0%!! Neat trick that!!

    Of course there is the sylness of using the BoE decision as an excuse and then dropping the rate by twice as much as the BoE. But also, given the well publicised move Egg made with their credit cards last week, is this extreme tightening of savings rates (particularly given the healthy competition in this particular market right now) a further sign that that there’s something really wrong in the land of Egg?

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  • As yet the Yorkshire BS has not dropped its savings rates (as it did in December) The monthly saver is still paying 6.85%

    What we are seeing is that the banks and building societies have no scope to cut mortgage rates – some are putting them up regardless of what the BoE does – and little scope to cut savings rates because they know investors will put their money elsewhere.

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