Saving has become more common in the wake of the recession, an expert has said.
The ongoing effects of the global economic downturn have put the need to place cash in savings accounts. According to Annie Shaw, editor of online resource Cash Questions, a growing number of people are deciding to protect what they already have in terms of their personal finances, instead of continuing to spend in the wake of the recession.
The attitude of the majority of consumers towards money has been altered by the slump, as prior to its onset their was a widespread tendency to resort to options such as a credit card in order to fund both emergency purchases and everyday costs.
However, the tightening of lending criteria by many banks and building societies has resulted in people reassessing this, as they now realize that it is much tougher to access such finance.
Therefore, the expert added, the essential nature of having “abundant money for themselves” storied away in savings accounts, is “of course a good idea”.
The inclination in a poor economy – we’ve got a slow economy – is to conserve one’s resources. One feels less confident about one’s own economic future. You may have less money to spend and be fearful about your job, and therefore your inclination is to save more.
Recently, a research suggested that saving is now a more attractive option for people than it was in the past, a type of accounts generally could have more competitive rates following the worst aspects of the recession.
For example that the study found is since the Bank of England reduced the base interest rate to 0.5 per cent in March 2009, rates on such deals have generally risen.
Meanwhile, research has shown that very few savings accounts offer a real return following the recession.
A study has established that based on the Retail Prices Index measure of inflation, which currently stands at 5.2 per cent, just 0.3 per cent of the savings products available from banks and building societies will give customers a proper return on their investment.
According to data collated by the independent financial research company, of the 1,869 savings accounts out there on the market, just six give consumers the opportunity of increasing their funds.
An analyst for banking: “With high inflation on one hand and a prolonged low-base rate on the other, the current economic environment is really impacting on savers.”