There could be good news for savers
April 13, 2008
According to a recent report there could be some good news in store for savers who have been concerned about the safety of their savings following the Northern Rock crisis last year, when many pulled their savings from the bank amidst fears that the bank was going to collapse. At this time only the first £2000 of savers’ money was guaranteed by a 100% guarantee from the government, so understandably many people with larger amounts in savings were concerned. This resulted in nearly £2 billion being taken out of savings from Northern Rock in just a few days.
The good thing that arose from the Northern Rock crisis was that the government realised the need to increase the guarantee on consumers’ savings in order to restore confidence, and therefore the limit was raised from just £2000 to £35,000. Government officials hoped that this sharp increase on the level of savings on which the 100% guarantee applied would reduce the chances of a mass withdrawal of savings again in the future similar to that seen with Northern Rock.
However, consumer confidence still remains low, and the FSA has now put forward proposals to increase the limit yet again. The Financial Services Authority is due to put together a report on the issue in May, and the raised limit has even been backed by officials from the British Banker’s Association, who have agreed that consumer confidence levels need to be raised, and this increased guarantee could really help.
If the raised limit does go through following the FSA proposal savers could enjoy the 100% guarantee on the first £50,000 worth of savings by the end of this year. This could also result in a higher percentage of consumers being covered by the government guarantee. Currently around 96% of savers are covered by the guarantee but once these proposals are passed this could rise to 98%.
Recent additions:
- Popularity of cash ISAs rising compared to equity ISAs
- Long way to retirement for today’s older generation
- Lack of supervision over Northern Rock crisis
- Possible rise in government savings guarantee
- Banks using baffling security measures to protect consumers
Related Articles
- Interest rate rises mean more good news for savers Although the latest interest rate rise has dealt yet another blow to homeowners and those with variable rate loans, it could prove very fruitful to
- Banks start to cut savings account rates Earlier this month the Bank of England cut the base rate by 0.25% from 5.75% to 5.5% in a move that was welcomed by many
- Some savers could cash in from interest rate rises Last week saw the Bank of England's Monetary Policy Committee announce a fifth interest rate rise in the space of a year, with a further
- Savers advised to take up fixed rate deals before rates fall With interest rates widely expected to fall twice by the middle of this year savers are being warned that fixed rate accounts that offer good
- Savers lose out again with Barclays Savings customers with Barclays Bank have been left seething after the banking giant cut interest rates on savings again, stinging savers for the third time
Comments
Got something to say?