The Bank of England has indicated that it is likely to increase the bank rate in the near future, with market commentators speculating that this could be as early as next month.
When this happens, this could help push interest rates up, meaning savers could get a greater return on their cash, but on the flip side, this means borrowers may end up owing more. This is the perfect time for specialist banks to help encourage good saving habits and help turn the UK back into a nation of savers.
As a nation, we are borrowing more and saving less. According to the latest figures from the Office of National Statistics (ONS), in 2017 saving levels fell to their lowest point since records began over 50 years ago, with the households’ saving ratio dropping to 4.9% as households’ spending exceeded the growth of households’ income. In addition, the ONS figures showed that last year UK householders were net borrowers for the first time since records began 30 years ago, turning us from a nation of savers into a nation of borrowers. This is clearly not an ideal situation.
We believe that it is important for consumers and companies alike to remain focused on making the most of their hard-earned cash and that saving accounts can help us all to invest in the future.
As part of our latest UK SME savings tracker survey, when asked what they would invest in if they made a return from their business savings, 28% said business infrastructure, while a quarter (25%) said they would use the money for research and development. This is positive to hear, so how do we encourage more people to put more money away?
First, saving habits have to be learned. Thankfully, personal finance has become a mandatory part of maths and citizenship lessons in secondary schools, with many educators recognising the importance of introducing these concepts to children as early as possible. The good news is that it’s never too late to start learning. There are plenty of resources out there to help us establish better saving habits, no matter what age we are.
Second, shopping around is key. It sounds so simple, but it’s a task easily overlooked. Wherever possible we should be reviewing our personal and business mortgages, loans, credit cards and other sources of borrowing to ensure we are on the best possible rate. After all, if we can cut the interest rates we pay to borrow, we will have more to save.
With spring being a season of growth, what better time is there to consider your options, shop around and ensure that this time next year you are reaping the rewards? We believe specialist banks have an important role to play in encouraging more people to save and help lift the savings ratio up once more.
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