interest

[lopper21]

why should savers
be penalised
just because the banks building societes got it wrong
tia

[sqad617]

They did and your are right "savers shouldn't be penalised"............but what is your answer to the problem. The Banks and Building Societes have no money. there is no confidence in the pound which is in freefall, nobody wants your sterling savings.

[Hammer]

Because the point of lowering interest rates is to stop savers and encourage spenders. If all you savers took out your savings and bought stuff (and all those who can actually get credit borrowed and spent more) then shops won't close down, people won't lose jobs and the world will be happy again.

[sqad617]

The question was "why should savers be penalised" not why are the interest rates low" Not the same thing.

[buildersmate]

Its a free market for your money. If you don't like the rate invest in something different - property, equities if you think you can do better. The choice is yours.

[sqad617]

Agreed buildersmate, but our mate is saying, "why should savers be penalised" .......same answer doesn't matter whether you save in properties, stocks. pension plans, the question he posed remains unanswered.

[factor-fiction]

I sympathise because I'm a net saver but I accept that's the way things work. If interest rates fall to 2% and banks lend money at say 4% we can't expect them to still pay 6% on savings-otherwise we'd all borrow as much as possible then invest it at a higher rate ... and the banks would collapse.

I know you'll say we haven't answered the question but it's not a valid question in my view. Look at it another way- when interest rates go up borrowers will say "why should borrowers be penalised". What level of interest rates would satisfy borrowers and savers and leave both groups happy that they aren't being penalised?

Unfortunately we can't please everyone all the time

[buildersmate]

One way of thinking about this (but I accept it is not a complete answer) is that every group suffers in a downturn. Net savers who use their investment income to maintain a living style lose. Employees lose (some more than others) because the probability of loosing one's job increases. Small businesses lose some turnover and probably income. The state can ill afford to increase benefits or pensions. so that group loses out.

Now I wonder if there are any groups who are protected - let's see now, those whose pension goes up in line with prices. Now which group is that? - I forget.

[sqad617]

Good point buildersmate.......public sector workers.

[sandmaster]

Let's turn this on its head. Bad debt has got us into this situation. Should we still be encouraging people to get into more debt or should we encourage thrift? As for the banks - their interest rates are still very high for individual borrowers outside the mortgage market!!