Get a better deal by shifting your savings from a low-interest account

Interest rates are at record lows and savers are facing the heat as inflation levels rise.  Pensioners are particularly in a bad shape due to this.  Another rise in the retail price index (RPI) was identified by the Office for National Statistics, which was at 4.8% and this adds to the further gloom.  But still the crisis in the banking sector has actually helped some people to get into the habit of saving.  There has been a decrease in the mortgage interest rates and this has left many households with some spare cash every month.

Mortgage interest rates on an average were 28% lower by the end of 2010, when compared to the rates in October 2008 and this was as per the research conducted by Sainsbury.  This situation is not likely to last if the Bank of England increases the interest rates in an effort to quell inflation.  Many borrowers have been trying to pay off debts by using their spare cash and there are the others who have put cash aside.  Then there are the ones that are forced to save like the first-time buyers and they don’t have an option but to put some money into savings in order to pay for the deposit for a home.  All the 100% mortgages seem to have vanished completely due to the present scenario.

According to the findings of the research conducted by HSBC, it has been found that despite the poor interest rates that are prevalent in the savings market, most of the people who were part of the survey have intentions of saving at least the same amount that they saved the previous year.  The largest group of first-time savers was in the age group of 18-24 and they were followed closely by the 25-34 age group.  At least 50% of them are pledging to save much more in spite of the pressures they face due to the restrictions in employment opportunities, rising costs of education, as well as overhanging debts.

Deciding where to park the funds is the most difficult part.  You will be restricted to a cash deposit account if you need funds and if you are saving for a short term.  But if you are willing to risk a part of your investment in order to get higher rewards then the money could be tied up in the stock market.  The key is not to put all the eggs in one basket.