While in Australia it’s the debtors who want to string bankers up for what they deem high rates, overseas it’s the savers who are feeling the pinch, as ultra-low rates return them a pittance.
So let’s travel to a few countries where monetary policy now eats the savers alive.
In the USA if you walk into Bank of America and are prepared to lock your money away in a CD (term deposit) for ten years you’ll receive a princely 2.3%, for five years that rate drops to 1.20%.
And at various other financial institutions you may be lucky to score an amazing 1% for 12 months.
As Texas retiree Hal Rawley, taking a big hit on his income, says, “This country was built on hard work and savings, but is now really screwing over savers.”
ING is the ‘high interest’ place to go with your savings in snowy Canada and your return for a 12 month GIC (term deposit) will be 1.25%.
Bank of Montreal customers will get 1.15% for their loyalty over 12 months.
Calgary resident, Lee Tunstal knows the score, “If you are a saver you’re absolutely losing money to inflation.”
In the UK things are slightly better, as a two year fixed rate bond (term deposit) with Halifax will attract 3.85%
For one year, Bank of Scotland will offer 3.20%, not as offensive as across the Atlantic, but savers in the UK still aren’t happy, with a group called ‘Save our Savers’ now fighting on behalf of the frugal.
Of course there are various reasons why these three countries aren’t a saver’s paradise, in some instances they’re trying to restart economic growth (US & UK) or in others, stave off falling growth (Canada).
Unfortunately, it all comes at the expense of the savers to subsidise the debtors.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. If you want help with your financial future, we’re arguably the best financial advisor in Australia.
