The general concensus is that the Monetary Policy Committee won’t change the Bank of England Repo rate (base rate) in their meeting taking place this week. Expectations are that the rate is currently on a downward path although inflationary pressures may temper the MPC’s willingness to reduce further and faster.
There are clear economic worries too and suggestions that the US economy is in recession may lead to similar revelations over here in due course.
From a financial point of view the fallout from the US sub-prime credit crisis has meant that banks are generally unwilling to lend to each other and are finding it both more difficult and more expensive to raise wholesale funds.
This gives us an unusual situation.
If you’re a saver the best deposit rates are significantly out of kilter with the base rate. Ordinarily you’d expect to be doing well if you could find a savings rate that was equal to - or just below - the bank base rate. Now, however, you can beat the base rate by over 1% with certain cash ISAs or savings accounts. This is happening for two distinct reasons: firstly general eagerness to raise retail funds and secondly new entrants (typically foreign bank subsidiaries) who have to offer best buy status accounts to obtain sufficient customers through the resultant publicity.
(more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
While credit cards have encountered considerable negative publicity recently with reports of accounts being closed and credit limits be reduced, there are still some worthwhile incentives being offered, and for those with good credit ratings who repay their entire balances each month, they are worth considering.
David Black, Principal Consultant - Banking at Defaqto said: “There are a variety of reward based credit card schemes and these include points schemes, air miles and cashbacks. Some of them can be very difficult to compare and, certainly in the case of cashbacks, it’s worth reviewing what’s available on a regular basis, as the best offers often gain that position by virtue of a short-term introductory enhanced rate.
“It’s possible to use different cards for different types of spend to take advantage of the enhanced returns marketed by some credit cards. For motorists, the Shell card is currently a clear market leader.
“If you are unlikely to repay the entire balance every month you should concentrate on the interest charged rather than the rewards offered.” (more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
It is interesting to learn that Alistair Darling is establishing a procedure should another Northern Rock style crisis occur, but is this really the answer? Surely the most important measure is to ensure that no bank gets into the same situation. The problem arose because Northern Rock decided they could make money by lending to people that could not afford such a high level of debt and without a sufficient margin in the security offered.
Naturally we do not want to return to the boom and bust style of life but there are lessons to be learned or remembered from those times. I admit that I now qualify for a bus pass and life has moved on in the past thirty years but none of us can just march on without balancing the books. (more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
