Less Money Put Aside as Interest Rates Dive; PERSONAL FINANCE
Byline: JOHN CRANAGE Personal Finance Editor
The amount of money flowing Into savings accounts has plunged as rates fall to record lows, a brace of surveys has shown this week.
Interest paid on with-notlce accounts dropped to a record low average of just 0.29 per cent in January.
The returns paid on branch-based Instant access and notice accounts, tax-free ISAs and bonds are all now the lowest since records began, according to the Bank of England.
But variable rate mortgage customers have benefited from the recent steep falls In official Interest rates, with Interest charged on both standard variable rate and tracker mortgages for new customers now also at record lows.
Perhaps not surprisingly, a second report showed that Individuals are now saving only about half the amount they were last year.
They are, however, dipping into their savings less, according to Birmingham Mldshlres.
The average amount put aside In the last quarter of 2008 fell to pounds 329 from pounds 644 during the same period In 2007, the Wolverhampton-based savings specialist said.
Over the same period, the amount of money withdrawn from savings accounts fell by 40 per cent, from pounds 506 to pounds 302.
Birmingham Mldshlres' survey found that only nine per cent of people raided their savings to buy luxuries during the final quarter of 2008, compared with 39 per cent a year earlier, while there has also been a steep drop in the amount of savings spent on holidays and going out. …