Savers Lock Away Billions In Costly Accounts
Filed under: Debt Conslidation Loans @ October 27th, 2008
More than 13 million people throughout the UK are using savings accounts which charge them to make a withdrawal, Sainsburys has claimed.
According to the group, more than 165 billion pounds could be locked away in these types of financial products, meaning that consumers could be paying a premium when raiding their savings during difficult circumstances. Meanwhile, a further 5.8 million people said that they used the accounts, although they had no idea how much money they had stashed away in them.
Research carried out by the group found that of the top 50 savings accounts on the market, nearly a quarter (24 per cent) restrict the amount of money that can be taken out, while around one in ten (eight per cent) charge accountholders for the privilege of withdrawing their cash. The group noted that the costs of doing so can cancel out the benefits of using the savings services in the first place. It noted that with some accounts, taking money out would negate the interest accrued over the course of the month.
Furthermore, Sainsburys explained that if a saver had 10,000 pounds in an account offering a 6.5 per cent annual equivalent rate (AER) and made one withdrawal in the course of four months, the AER on the account would effectively drop to 4.33 per cent. In such a scenario, they would lose as much as 217 pounds over the course of a year, the group claimed.
Consumers who are finding it difficult to put money aside as bills mount, taking out a debt consolidation loan may prove an effective way to get back on a firm financial standing.
Meanwhile, Sainsburys urged those who are putting cash away each month to be careful not to withdraw money from their savings accounts. Research indicated that 17 million people have done this in the past, meaning that they could have undermined their savings efforts by wiping out interest.
Commenting on the findings, Helen Cook, head of savings at Sainsburys Finance, said: “There are a number of accounts that offer a very attractive rate of return provided you dont make a withdrawal. If you dont need to access your savings, these accounts can be very attractive, but if you have to take money out the rate of interest you receive can fall substantially. Given the rising cost of living and economic difficulties, it may be worth moving your savings to an account without penalties if you think you may have to access your savings.”
For consumers who have found their monthly outgoings rise in recent months as inflation continues and cheap mortgage deals dry up, taking out a consolidation loan may be attractive. In applying for this type of loan, consumers could find they are able to stretch repayments over longer periods and take the strain of their monthly cashflow. Opting a debt consolidation loan may be of particular interest to those who have failed to budget properly, after the Fair Investment Company warned that doing so was essential in winning the battle against the credit crunch.
1 Stop Finance Shop providing you with breaking debt consolidation loans news.
