One of the ways that governments around the world have tried to kick start the economy during the recent recession has been through the reduction of interest rates.
10 years ago the Bank of England base rate was 11.38%.
Today, the current rate is 0.5%.
If individuals have variable rate loans or mortgages on their home and the interest rate falls, their interest payments will also fall.
As a result these people will have more money in their bank account and in theory this additional money should make them feel more relaxed about buying goods. If these additional goods are purchased then the economy is stimulated.
Lower interest rates may also encourage individuals and organisations to take out new loans. This money can then in turn be used to buy products which again should stimulate the economy.
Now, whilst low interest rates are good for people that are borrowing money, they are not so good for people who are investing money and looking to receive interest on the cash they’ve invested.
Certain parts of the population are more reliant on interest received as part of their income than others. Pensioners for example, who are no longer working can be hit particularly hard as they often rely on interest income.
I’ve just had a quick look at the internet bank Egg.
Egg was established in 1998 and 4 years ago was bought by Citigroup (Citi). It’s one of the top internet banks around and offers good interest rates when compared to some of their competitors.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2011-06-01 20:04:422011-06-01 20:04:42Would you criticise me if I spent ALL of YOUR bonus on alcohol?
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