Consumer Trust In Savings Providers Questioned
Recent problems experienced by the financial markets have significantly undermined consumers’ confidence in lending institutions.
So claims Newcastle Building Society, which has released research today (April 28th) indicating that one in ten people believe that their money is safest when stashed under the mattress. The credit crunch has resulted in the number of people electing to keep their cash where they can see it nearly trebling, from four per cent to 11 per cent. In Wales and the Midlands, the proportion of those keeping capital in cash is as high as 15 per cent.
While those saving funds might feel safer knowing that access to their money is only a mattress-lift away, secured loans might provide a more structured and stable way of funding purchases.
Despite the above statistics, the financial organisation maintains that the majority of Brits would still like to see any savings they have stored gathering interest in a dedicated account, with more than a third (34 per cent) choosing building societies to provide this service. This marks a fall from the 46 per cent who considered such institutions to be the safest place to keep their money last year - although it remains higher than 2007’s figure of 28 per cent who believe banks are the most secure option.
Wendy Lee, spokesperson for the firm, says: “These findings are a stark sign of the times, but they are also exacerbated by the hype surrounding the credit crunch. With some attractive savings products available, you might think people are barmy to stash their cash at home. Unfortunately, some savers now have an exaggerated view that investing their money with a building society or bank can be a risky business, which is not the case.”
Those seeking to store away funds but also intending to undertake some significant spending, for example renovating a bathroom or kitchen or buying new car, might like to consider a secured loan. The best rate loans can provide an affordable means of making purchases with the cost spread over a fixed period - meaning that consumers can include the cost within their monthly budget and avoid dipping into rainy day savings.
Other findings in Newcastle’s survey included the fact that older people are more likely to identify building societies as the safest depository for their savings - and Ms Lee asserted that younger people should also consider what such institutions have to offer in terms of savings products. “People should speak to their savings provider if they are looking to invest or if they are concerned about existing investments - in the vast majority of cases people will be reassured,” she added.
Although the credit crunch has impacted on saver behavior and attitudes, the secured loans market remains in good health, according to price comparison site Moneyfacts. In November the company reported that while many commentators had identified tightening criteria being used by lenders, cheap loans remained available to those prepared to undertake research. However, she did recommend that consumers act “sooner rather than later” if they intended to borrow using the best UK loans on the market.
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