Saving In the Current Economic Crisis

There has been a huge shake up in the banking systems on both sides of the Atlantic and this has affected the value of people’s savings. When you have a severe economic down turn then interest rates start sliding, this is great news if you have something with a variable rate of interest because the company is duty bound to pass that saving onto you.
When Northern Rock went down in the UK and the British Government had to bail the company out to the tune of billions of dollars, people were waiting to draw their money out of the bank in case it got swallowed up in the bank’s debt. Government input has meant that people did not lose their savings, but the interest rate that they receive has been drastically reduced.

The best time to save money is when the economy is good because that is when savers receive higher rates of interest on their money. At the moment interest rates have tumbled and many people who would normally live off the interest on their savings, are no longer able to do this. Not being able to access savings because you have invested in an account that will not come to fruition for a number of years, can be worrying if the institution that is holding your money goes into melt down mode. If you only have a small amount of savings then you might be just as well off with a post office savings books as you are with a bank account.