Saturday 20 January 2018

Only one in four thinks it's worth saving cash

Charlie Weston Personal Finance Editor

THE confidence of savers has been shattered by savage cuts in the interest banks are paying depositors and huge tax hikes.

Just one in four people believes now is a good time to save.

And most people blame the Government for negativity around saving, according to the latest savings index commissioned by Nationwide UK (Ireland).

Just 23pc of people think now is a good idea to save, the lowest score recorded since the index started in January 2010.

People over the age of 50 are even stronger of the view that now is a bad time to save.

One in eight people now has a preference for spending their money rather than stashing it away in a bank.

Banks have been cutting the interest they pay on money deposited with them for 18 months in a row, according to the most recent figures from the Central Bank.

A number of banks are paying less than 1pc for money left with them, which means that inflation is eating away at the value of savings as fast as they generate any interest.

And state savings schemes, most of which are tax free, have seen the interest paid on them halved in the past year after three reductions in rates.

The tax on savings is set to jump to 41pc, from 33pc at present, at the start of next month. This is a bid by the Government to force savers to spend their money in the economy.

There is around €120bn in household savings between money in banks, credit unions and state savings schemes.

The Nationwide UK (Ireland) survey, which is compiled in conjunction with the Economic and Social Research Institute, found that six out of 10 people were negative towards government policy on savings.

This trend is also more pronounced among the over 50s, with 69pc of this group believing that government policy discourages saving.

Despite this negative sentiment, when asked about their preferred use for any spare money available, preference for saving remains strong with 39pc of respondents saying they would save their spare cash.

Preference to spend has also increased to 13pc, compared with 8pc last month, while preference to pay down existing debts has fallen.

Irish Independent

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