Personal and business bank account providers have begun pushing for deposits by wooing low interest rate weary British savers.
Banks and business societies have stepped up their campaign to entice consumers into signing up for savings accounts as the world financial markets remain in crisis. However, as lenders are skittish in regards to how reliable the international capital markets will be, the benefit will likely be only short-term as they seek to increase the amount of cash in their coffers.
Interest rates on savings products are expected to remain abysmally low over the long term. Despite whatever rates are offered by lending institutions, banking industry experts caution savers to not exceed the compensation scheme ceiling of £85,000 on their deposits with each of their financiers.
As investors fled worldwide stock exchanges recently, the FTSE 100 closed last week down 13 per cent for the month of August. At the same time, British gilts and gold, which are traditionally seen as ‘safe haven’ investment opportunities, experienced a large increase in demand.
The banking industry is in fear of yet another credit crunch, with the worst outcome leading to financial service providers unable to lend already agreed-upon mortgages or to meet withdrawals. A quick way of boosting liquidity in the short term, campaigning for the public to increase their retail deposit uptake can result in a significant increase in revenue in just a short period of time.
One independent savings rate analysts recently remarked that over the past week, savings deals have become more heavily marketed with some quite aggressive promotional deals and a higher number of adverts. The new push for savings comes against the backdrop of plummeting stock markets worldwide, which were precipitated by fears of not only the possibility of a double-dip recession, but an increase in sovereign debt issues in both Europe and America.