Savings

Given the recent increases in interest rates, and the expected future increases, people may be forgiven for thinking that savers have not had it so good for sometime.

Some banks claim to be offering savers rates of between 6%-12%.

Unfortunately, when dealing with banks and other financial institutions, the actualite of what they offer very rarely matches their eye catching headlines tempting you to sign up for one of their products.

The Telegraph today looks behind the headlines, and reveals a few ugly truths about some of the banks' offers.

Despite the eye catching rates, the amount of money that people put by to save has fallen to its lowest in almost five decades.

The Office for National Statistics has released data that shows that the savings ratio, the share of incomes that people save, fell to 2.1% in the first quarter of 2007. This is half the previous quarter's level, and the lowest since 1960.

The fall in savings can be blamed on a number of factors:

-Low interest rates offered on savings accounts
-The disparity in rates between savings and loan offers (thus stretching family budgets)
-Low levels of income growth
-Ever rising house prices, forcing people to dip into their savings to be able to afford buy a home
-The tarnished image of the financial services sector as a whole (tarnished by eg bank charges, the endowment scandal and poor customer service)