Opinion  

Many a true word is spoken in jest - so I'll stop speaking

Simoney Kyriakou

Simoney Kyriakou

Savings rates are no laughing matter - I should know this by now.

However, I do like to shake things up when presenting at or hosting events. 

For example, I like to start with a little joke to see who's awake. It usually goes something like this: "Thank you all for being here - it is good to see so many of you, especially considering the FTSE 100 dropped 500 basis points this morning."

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So far, I haven't seen anyone leap out of their chair and head for the exit as a result. 

However, the first time I made this jest, back in 2007, was a few weeks before the run on Northern Rock started and the FTSE 100 started its 31 per cent drop to 4434 in 2008.

I passed this coincidence off as just that - coincidence - especially as I had not been working in either the sub-prime lending or the collateralised debt obligation markets at the time. 

However I'm starting to think I am bad news when it comes to making humorous pronouncements on financial matters.

The other week, at FTAdviser's Retirement Freedoms Forum in Harrogate, I welcomed delegates back from lunch by informing them: "The Bank of England has kept rates at 0.25 per cent... which means Santander will be reducing its savings rate from 0.1 per cent to 0.01 per cent."

They laughed (thankfully).

But I did not laugh on Monday this week (24 October) when I received a letter from Santander informing me my age-old savings account was reducing its interest rate from January 2017 because the Bank of England had recently reduced rates to 0.25 per cent.

My Santander account was to fall from 0.1 per cent to 0.01 per cent.

Now before you start talking about inertia and why am I in a poorly paying account, etc, this particular account has less than £200 in it, and is usually the account I keep open for my ebay sales.

In what passes for my spare time, I make and sell jewellery and cards, and wanted an account separate to my main one so that I could keep tabs on what came in and went out via PayPal without worrying that hackers would get into my main deposit account.

And thankfully my Isa is in stocks and shares and enjoying (as of today), 21 per cent growth.

But I could not help but wonder whether I had predicted such a negative turn of events with my jesting. It's happened before, in other walks of life and now it's happening with savings accounts.

Prescience or not, the fact remains that high street banks and building societies alike DO rely on savers' inertia to keep the interest payouts on savings as low as possible and the interest on debt as high as possible.