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| Low rates fail to deter savers, banks say | Low rates fail to deter savers, banks say |
| (about 1 hour later) | |
| A lack of confidence among consumers has pushed up savings levels in the last year, despite the low rates of interest available, banks say. | A lack of confidence among consumers has pushed up savings levels in the last year, despite the low rates of interest available, banks say. |
| Personal deposits with the UK's major banks rose by 5.5% in the year to the end of April, data from the British Bankers' Association (BBA) showed. | Personal deposits with the UK's major banks rose by 5.5% in the year to the end of April, data from the British Bankers' Association (BBA) showed. |
| This was despite many savings accounts featuring rates as low as 0.1% after tax. | This was despite many savings accounts featuring rates as low as 0.1% after tax. |
| Consumers' safety-first approach also meant demand for credit was low. | Consumers' safety-first approach also meant demand for credit was low. |
| Repayments outstripped new borrowing on unsecured loans and overdrafts by 6.7% in the year, the BBA figures showed. | Repayments outstripped new borrowing on unsecured loans and overdrafts by 6.7% in the year, the BBA figures showed. |
| "Low consumer confidence is depressing demand for new borrowing and consumers are continuing to save," said David Dooks, BBA statistics director. | "Low consumer confidence is depressing demand for new borrowing and consumers are continuing to save," said David Dooks, BBA statistics director. |
| Plastic still rising | Plastic still rising |
| There is £721bn in savings deposited with the UK's major banks, following a £1.4bn net addition in April. | There is £721bn in savings deposited with the UK's major banks, following a £1.4bn net addition in April. |
| This total level of saving is still below the £779bn outstanding in mortgage borrowing with the major banks. This level dropped slightly in the year to the end of April. | This total level of saving is still below the £779bn outstanding in mortgage borrowing with the major banks. This level dropped slightly in the year to the end of April. |
| The BBA said that mortgage borrowing was remaining steady, because of the various government schemes that were propping up the home loan market. | The BBA said that mortgage borrowing was remaining steady, because of the various government schemes that were propping up the home loan market. |
| Credit card borrowing rose by 5.8% over the year, a rise which the BBA said was "masked" by the contraction in other forms of unsecured borrowing. | Credit card borrowing rose by 5.8% over the year, a rise which the BBA said was "masked" by the contraction in other forms of unsecured borrowing. |
| Inflation pain | |
| The Bank rate, set by the Bank of England, has been at a record low of 0.5% for more than four years. Meanwhile, the cost of living, measured by the Consumer Prices Index (CPI) measure of inflation, stood at 2.4% in April. The Bank's target is inflation of below 2%. | |
| Only one "regular" savings account and only six tax-free Individual Savings Accounts (Isas) offer interest that beat the inflation rate, recent research by financial information service Moneyfacts found. | |
| It said that £10,000 invested in an average savings account five years ago, and facing a 20% tax rate, would be worth £8,861 to spend now. | |
| "The pound in the savings account is still being savaged by stagnant returns and above-target inflation," said Sylvia Waycot, of Moneyfacts. | |
| Simon Rose, of the pressure group Save Our Savers, said: "Saving is now a return-free risk." | |
| He said that many people were nervous, so were happy to save, even though rates were low. He said the elderly, especially, could not afford to take on other risks. | |
| He encouraged savers to shop around for accounts offering the best rates and warned that the situation was unlikely to change for some time. |