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MANAGING CASH
15th September 2023
5 minute read
Cash deposit rates increase to above 5%

Interest rates still predicted to go higher

New technologies make managing cash easier

FSCS protection for substantially larger amounts of cash

What to expect for interest rates

OVERVIEW

It doesn’t take much searching to find short term deposit rates paying 5% or more. Not since 2007 have we seen cash deposit rates at these levels and even though it was relatively normal to expect a return over 5% on savings for the last 15 years we have seen savers un-rewarded. That seems to have turned around now and borrowers are hurting but savers are suddenly achieving a healthy return on their capital.
There have been lots of knock-on effects of the lower returns from deposits and significantly borrowers have benefitted from ‘cheap’ money as have assets. Stock markets, property, as well as all sorts of tangible assets (classic cars as one example) have increased substantially relative to earnings.

A very quick search revealed the rate below on the Money Supermarket website.

USING TECHNOLOGY

In the past we would have trawled the high street going from bank to bank to ascertain the best rate for our savings. Whilst this is still possible the number of High Street banks actually in the High Street has reduced. It is therefore much harder to physically attend a branch. By contrast, the Internet is becoming the default option for so much of what we do in our lives.

In some ways this disadvantages a generation, but for those who are internet literate, it does open up a whole host of new opportunities, including how we manage cash in future.

Instead of having to physically go into a branch, we can now do this digitally in the comfort of our own homes!

Flagstone, a provider that we know well, gives digital access to multiple banks and multiple rates. This means that you can set your requirements on their portal so that you can filter the options available and easily find the best rates.

There are several other big advantages, and in particular you would only have to complete the money laundering requirements once, even if you were to split your money between 15 banks or more. This allows significant financial services compensation scheme protection of your capital at the touch of a button.

With this in mind – technology can now help make life more efficient, It can help to protect your money from risk and remind you of when the deposits mature so that you can log in again and easily repeat the process.

If you would like to discuss taking advantage of higher rates for savings please contact us.

WHAT NEXT?

The obvious answer is that no-one really knows but the expectation is that interest rates will, over time, fall. This will ease the burden on households with debt and mortgages but affect savers negatively. 

Some form of recession is expected as the global economy slows down at which point central banks may have to stimulate – hence lower interest rates.

Here is some interesting data about the levels of mortgage debt over time. Levels now nearly as high as in 2007 albeit some 15 years later!

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