17/06/03

With meagre interest rates on savings accounts and poor stock market returns, Brits are squandering the interest on their savings to the tune of £57bn a year simply by not finding the best home for their money, according to Direct Line Financial Services.

A survey conducted by ICM research on behalf of Direct Line Financial Services revealed that nearly 8 out of 10 of us have a savings account, with an average total of £5,500. However, we are not making the most of our money as nearly 60% of us don't have a clue what rate we are actually getting on our savings.

And while 90% of us keep our savings in a bank or building society account, moving our savings into our property could give us a much better return on our investment.

For example, just by moving £5,000 savings into a current account mortgage, a couple borrowing £75,000 over 25 years with a Direct Line One account, would be able to chop off £14,756 in interest payments and repay their borrowing three years and eight months early.

Direct Line Financial Services Commercial Director, Phil Kennedy said:
"Although some people are starting to realise the benefits from investing our savings in our property, many of us still have our heads in the sand.

"By moving their savings into a current account mortgage, like the Direct Line One account, customers can benefit from one interest rate (5.2.%) being applied to their current account, home loan and any borrowing and savings, and best of all, it's tax free.

With a current account mortgage customers can also benefit every time they pay their salary into their account as every £1 left unspent is offset against their mortgage daily.

The survey also asked respondents to estimate how much interest they would get back on savings of £5,500. Astonishingly, one in three respondents had no idea what they would earn in a year, while nearly half of the respondents (45%) greatly overestimated what they thought they would earn, guessing at between £150 - £450. In actual fact, the average saver would only earn £132 in interest after tax.

The survey also revealed that nearly 70% of us are saving for non-specific purposes like a rainy day or in case of emergency, so our money could be put to better use. The flexible features of a current account mortgage means that customers still have access to equity on their homes when that rainy day appears, but while the money is in the account, it is still working to pay off their mortgage quicker.

Provided by Direct Line