# Interest Rates on Saving



## Paphos00 (Nov 14, 2013)

Was just wondering after all of the problems with the Cyprus banking system last year what the current interest rates are like on people's savings at the moment. Are they the same diabolical returns we are getting here in the Uk. And does anyone feel save with their savings in the Cyprus Banks.
Were do you keep your savings? obviously you want your money to be safe but we all want to get a decent return.
If we come over to live next year we are not sure where we will keep our savings certainly not all in one basket.
Do you feel safe leaving any savings in a Cyprus bank or should we feel save leaving any of our money in any bank as it has to go somewhere .


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## Baywatch (Mar 30, 2014)

Paphos00 said:


> Was just wondering after all of the problems with the Cyprus banking system last year what the current interest rates are like on people's savings at the moment. Are they the same diabolical returns we are getting here in the Uk. And does anyone feel save with their savings in the Cyprus Banks.
> Were do you keep your savings? obviously you want your money to be safe but we all want to get a decent return.
> If we come over to live next year we are not sure where we will keep our savings certainly not all in one basket.
> Do you feel safe leaving any savings in a Cyprus bank or should we feel save leaving any of our money in any bank as it has to go somewhere .


I am sure that everyone will say that keep the money outside Cyprus. But on the other hand funds up to 100 000 € is as safe here as in any other place.

Interest-wise I am sure that it is as bad here as in any other country. When Central Bank interest rates are so extreme as they are now, there is no room for high rates on savings. Somehow the bank must earn money


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## hissyfits (May 5, 2013)

I would go for security rather than higher interest rates. With Troika refusing to give the next loan to Cyprus and the Government having no financial reserves, there is speculation that another bank raid could be possible. 

I agree with Paphos00 but its not just about the safety net of keeping funds up to 100 000£ its also about being able to access that money when you want it rather than banks imposing withdrawal limits and not being able to remove it from Cyprus.


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## Baywatch (Mar 30, 2014)

hissyfits said:


> I would go for security rather than higher interest rates. With Troika refusing to give the next loan to Cyprus and the Government having no financial reserves, there is speculation that another bank raid could be possible.
> 
> I agree with Paphos00 but its not just about the safety net of keeping funds up to 100 000£ its also about being able to access that money when you want it rather than banks imposing withdrawal limits and not being able to remove it from Cyprus.


I think everyone say that keep saving out, have daily needed money here


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## David_&_Letitia (Jul 8, 2012)

Baywatch said:


> I am sure that everyone will say that keep the money outside Cyprus. But on the other hand funds up to 100 000 € is as safe here as in any other place.


We seem to have been here before! The €100k Deposit Protection Scheme is set up as a guarantee by the state to re-assure the public that banks are safe institutions to invest in. There are three problems here though:

1. It applies _*only*_ in the event of a bank collapse.

2. Is the State financially able to discharge the guarantee in Cyprus' case?

3. The original Bailout conditions last year, imposed by the Troika and initially agreed by the Cyprus Govt was for a one time 'tax' on *all* money people had in bank accounts. This amounted to 9.9% on amounts over €100k and 6.75% on amounts below €100k in order to raise €5.8Bn. As these amounts were arbitrarily arrived at, the amount *could* have been 50%, 80%, 99% - anything as long as the bank itself did not collapse in order for the DPS to kick in.

You will remember that there was much discussion on the Forum about this outrageous proposal in your thread 'Bailout Ready'.

The thought process of both EU Ministers and the initial agreement by the Cyprus Govt exposed to everyone that the Deposit Protection Scheme does not limit loss of bank deposits. The State simply has to call such a raid a tax in order to effectively steal our money (no bank collapse therefore no DPS invoked). They all even had the temerity to call it a 'haircut' in order to ameliorate the reputational damage!


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## Baywatch (Mar 30, 2014)

David_&_Letitia said:


> We seem to have been here before! The €100k Deposit Protection Scheme is set up as a guarantee by the state to re-assure the public that banks are safe institutions to invest in. There are three problems here though:
> 
> 1. It applies _*only*_ in the event of a bank collapse.
> 
> ...


But they still honored the 100000 € guarantee.
And everyone understand that if the tax had been implemented, it would have meant the collapse of the banking system worldwide, not only in Cyprus. Even the IMF agreed to that


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## Talagirl (Feb 24, 2013)

I remember checking our account on-line when the proposed haircut of all ordinary bank accounts with funds under €100,000 was proposed and the bank had already frozen the amount we would have had to pay if it had gone ahead. 

At the time there was debate that if everyone had a percentage removed from their accounts it would be better than just applying it to the under performing banks (eg BOC, Laiki) but naturally the other banks didn't see why they or their customers should be penalised when it wasn't their bad banking practices had brought the country to this situation.

As it is, many innocent people who were eg saving for their childrens' university education had their savings taken away, businesses have been affected and yet many 'people in the know' managed to transfer their funds overseas beforehand.

Returning to the original question about savings, we used to have the 3 month term deposits with the interest prepaid, but now only have instant access accounts in Cyprus for living costs.

However, we have a credit card issued by our Cypriot bank and they have blocked a sum of money at a rate of 120% of the credit card limit - this is in a savings bond and still gets a good rate of interest, but we can only release it if we cancel the credit card!


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## Baywatch (Mar 30, 2014)

Talagirl said:


> I remember checking our account on-line when the proposed haircut of all ordinary bank accounts with funds under €100,000 was proposed and the bank had already frozen the amount we would have had to pay if it had gone ahead.
> 
> At the time there was debate that if everyone had a percentage removed from their accounts it would be better than just applying it to the under performing banks (eg BOC, Laiki) but naturally the other banks didn't see why they or their customers should be penalised when it wasn't their bad banking practices had brought the country to this situation.
> 
> ...


The 3 months accounts with prepaid interest were one of the reasons that the banks failed. Laiki offered some 14% on some accounts like that and anyone with any knowledge of how it works must have realized that this would not hold.

When the interest banks pay to borrow money from other banks have been under 1% for years it must be obvious that if a bank offer 14% to borrow the same money from private persons, something must be seriously wrong


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## Talagirl (Feb 24, 2013)

Since 2005 the most prepaid interest we received on our 3 month deposit was 4.75%. At one stage we also had an annual bond with interest paid at the end of the term and that was 4.50% but we didn't like the inconvenience of having our money tied up for a year. The savings bond attached to our credit card account accrues 3.6% interest. We have never had savings in Laiki or BOC.


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## wizard4 (Feb 3, 2013)

I have a savings account here in the UK, however I assume its better to leave it here in the UK?
Cheers


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## zach21uk (Jun 26, 2014)

I am with Barclays in the UK and get less than 0.5% with my instant access savings account. They offer bonds with slightly better rates, but still under 2%. 

The good days of decent savings interest has passed


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## PeteandSylv (Sep 24, 2008)

I have put money into Ratesetter on 30 day withdrawal and currently get 2.6%. I also have money in Zopa who are currently offering 3.7% on up to 3 year and 5.2% on up to 5 year periods. These rates apply regardless of the amount invested.

Reasonably decent nowadays.

Pete


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## Jammydodger63 (Jun 25, 2014)

PeteandSylv said:


> I have put money into Ratesetter on 30 day withdrawal and currently get 2.6%. I also have money in Zopa who are currently offering 3.7% on up to 3 year and 5.2% on up to 5 year periods. These rates apply regardless of the amount invested.
> 
> Reasonably decent nowadays.
> 
> Pete


Good referral from Pete, but just a note for the uninitiated, both Ratesetter and Zopa are peer-to peer lenders - online financial matchmakers matching individual borrowers or companies with savers willing to put money aside for longer, looking for a good return.

Peer-to peer lenders are now regulated by the FSA (since April '14) - HOWEVER, in the event of a firm going belly-up they are not covered by the Government backed Financial Compensation Scheme which pays out up to £85k per person/institution.

Zopa is the oldest of these types of firms (2005), but as long as you know the potential risks, then a better rate of return on savings can be achieved. As with most things in life, when something looks attractive there's usually a compromise somewhere.

Tracey


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## PeteandSylv (Sep 24, 2008)

Jammydodger63 said:


> Good referral from Pete, but just a note for the uninitiated, both Ratesetter and Zopa are peer-to peer lenders - online financial matchmakers matching individual borrowers or companies with savers willing to put money aside for longer, looking for a good return.
> 
> Peer-to peer lenders are now regulated by the FSA (since April '14) - HOWEVER, in the event of a firm going belly-up they are not covered by the Government backed Financial Compensation Scheme which pays out up to £85k per person/institution.
> 
> ...


Thank you. That's good clarification, Tracey, except lender do not have to lend for long term. As I said my Ratesetter lending is 30 days. I did not include your caution in my post as I didn't want to sound as if I was promoting or advertising these companies and all is made clear on their websites.

It is also worthy of note that these P2P companies have an excellent scheme that sets money by to cover borrowers bad debts. To date I understand that this has never been used as all borrowers are vetted carefully and their loans are distributed among lenders.

As you say there is a compromise which is why I have deposited my money cautiously with them but nevertheless am pleased with the results to date.

Pete


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## Jammydodger63 (Jun 25, 2014)

PeteandSylv said:


> Thank you. That's good clarification, Tracey, except lender do not have to lend for long term. As I said my Ratesetter lending is 30 days. I did not include your caution in my post as I didn't want to sound as if I was promoting or advertising these companies and all is made clear on their websites.
> 
> It is also worthy of note that these P2P companies have an excellent scheme that sets money by to cover borrowers bad debts. To date I understand that this has never been used as all borrowers are vetted carefully and their loans are distributed among lenders.
> 
> ...


Totally agree with your comments Pete and no, I didn't think you were advertising 

I guess for me (as an ex banker) risk is risk - whether it's 1 day, 30 days or 1 year - you can never know the physical day when a firm will go bust, so the time period is immaterial really. And yes you're right, to date these firms are acquiring a good rep for vetting etc., however they currently *are not* required to set funds aside to cover bad debts - this will in fact come into force in April 2017 wherein all P2P's will have to set aside £50k to act as a buffer in the event of a default.

But like I said, as long as you're not investing your life savings in one company, then you should be fine.

Tracey


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## zach21uk (Jun 26, 2014)

Good advice here. I'll be looking into Ratesetter and Zopa!


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