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Savers worry about where to put their cash

October 24, 2008 by admin  
Filed under Banking, Featured

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The world of finance has been thrown into complete turmoil over the past year, not just for borrowers and lenders but also for those looking for a safe place to stash their hard earned cash. It seems that until around this time last year we all had a pretty good idea of where we wanted to put our cash in order to make it work for us, but since the chaotic situation with Northern Rock threw the banking world into turmoil many of us have no idea what to do with our savings, and seems to be running from one bank to another clutching our precious cash in the hope that we will finally find a safe resting place for it.

After the crisis with Northern Rock many savers collectively took out billions of pounds worth of savings and placed them elsewhere, with many building societies reporting a high level of deposits in the months following the Northern Rock disaster. However, earlier this year Northern Rock was nationalised, and under government ownership all savings, as with the government run National Savings & Investments, became eligible for a 100% guarantee, providing consumers with a far greater safety net than they would get with other financial institutions.

However, the memories of the chaos with Northern Rock left many people determined to leave their savings in their existing accounts despite the increased guarantee. Until now that it. Over the past couple of months some major changes have taken place in the banking sector. HBOS, a major bank, has been taken over by the banking giant Lloyds TSB. This sparked fears over a possible collapse, and according to reports many people took their savings out of HBOS. On top of this the Bradford & Bingley recently fell into trouble, and part of it ended up being nationalised with the remainder – the savings arm – being sold off to Abbey. Again, this resulted in many people withdrawing their savings in a panic according to reports.

And where did these people head with their savings? Northern Rock, the bank that not so long ago had been the last place that people would have gone to deposit their savings. In the current uncertain climate it seems that many people are now desperate for that increased safety net that comes with Northern Rock. In fact, Northern Rock has been so inundated that it has had to start turning people away, because it is only allowed to take a certain level of deposit due to competition rules, as otherwise its 100% savings guarantee gives it an unfair advantage over other financial institutions.

However, there have recently been changes to the Irish banking system that could also benefit some savers. The increased safety net will now also apply to consumers with savings in UK branches of Irish banks, such as the Bank of Ireland, and also to those with Post Office savings accounts, which are run by an Irish bank. Some people may therefore decide to opt for one of these savings accounts in order to enjoy greater peace of mind over their cash

Tags: post office, hbos, icesave, northern rock, savings, lloyds tsb

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