Time is 'excellent' for savings rates

SAVERS have been warned that time is running out to take advantage of exceptional interest rates being offered by the banks.

This news comes as a survey shows consumers believe it is more important than ever to put money away in preparation for an uncertain future.

The Nationwide UK (Ireland) savings survey also indicates that many consumers are in debt with more than half saying they would use any spare cash to pay off loans or mortgages.

The savings index for July rose for the first time since it was launched in March meaning more people believe it is important to save. One in four think now is a good time to put money aside but just 40% are doing so regularly. This is down from 45% in June.

According to personal finance website, Bonkers.ie banks are offering exceptional interest rates on savings accounts.

Managing director of Bonkers.ie, David Kerr said: "For savers, now is an excellent time to take advantage of the savings rates currently on offer. Banks all need to meet the regulator's new requirement on the amounts they have on deposit and many are offering superb rates of interest to get their hands on your savings."

He said the good deals are unlikely to last for very long because once the banks have increased their deposit base they will likely reduce the great rates on offer now.

The July survey also shows that fewer people are unhappy with the amount that they are saving. Of those who are saving 4% think they are putting away more than they should, an increase from 2% in June.

Managing director of Nationwide UK (Ireland), Brendan Synnott, said one of the main drivers of the increase in July is that more people think it is a good time to save.

"This may relate to the further evidence of uncertainty about economic conditions and reflect the view that people are again becoming reluctant to spend because of this uncertainty."

According to Davy stockbrokers the savings ratio was 10% last year and although they believe this will drop to from 8% to 9% in the next few years, it will still remain up on the 6% average between 2001 and 2006.

Chief executive of the Irish Brokers Association Ciaran Phelan said there is no doubt that consumers have acquired a recessional savings habit.

"While there was a rush to government guaranteed deposits in 2009 and early 2010, our members have reported a sharp increase in client inquiries, primarily looking for cautious equity based investments, with some clients really feeling that now is a good time to get back into the stock markets," he said.

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